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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to 
Commission File No. 1-12235
Triumph Group, Inc.
(Exact name of registrant as specified in its charter)
 







Delaware
 
51-0347963


(State or other jurisdiction ofincorporation or organization)
 
(I.R.S. EmployerIdentification Number)


 
555 E Lancaster Avenue, Suite 400, Radnor, Pennsylvania 19087
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 251-1000
Securities registered pursuant to Section 12(b) of the Act:
 









Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered


Common Stock, par value $.001 per share
 
TGI
 
New York Stock Exchange


Purchase rights
 
 
 
New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒     No  ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes  ☐ No ☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No  ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No  ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one)
 









Large accelerated filer
☒
 
Accelerated filer
☐


Non-accelerated filer
☐
 
Smaller reporting company
☐


Emerging growth company
☐
 
 
 


 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  ☐     No  ☒
As of September 29, 2023, the aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant was approximately $579 million. Such aggregate market value was computed by reference to the closing price of the Common Stock as reported on the New York Stock Exchange on September 29, 2023. For purposes of making this calculation only, the Registrant has defined affiliates as including all directors and executive officers.
The number of outstanding shares of the Registrant's Common Stock, par value $.001 per share, on May 10, 2024, was 77,027,831.
Documents Incorporated by Reference
Portions of the following document are incorporated herein by reference: 
The Proxy Statement of Triumph Group, Inc. to be filed in connection with our 2024 Annual Meeting of Stockholders is incorporated in part in Part III hereof, as specified herein.
 
 


Table of Contents
 







Item No.
 
Page


PART I
4


Item 1.
Business
4


 
General
4


 
Products and Services
4


 
Proprietary Rights
5


 
Sales, Marketing, and Engineering
5


 
Backlog
5


 
Dependence on Significant Customers
6


 
Competition
6


 
Government Regulation, including Environmental Regulations and Industry Oversight
6


 
Human Capital Resources
7


 
Executive Officers
9


 
Recent Developments
10


 
Available Information
10


Item 1A.
Risk Factors
11


Item 1B.
Unresolved Staff Comments
21


Item 1C.
Cybersecurity
21


Item 2.
Properties
22


Item 3.
Legal Proceedings
22


Item 4.
Mine Safety Disclosures
23


 
 
 


PART II
24


Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
24


Item 6.
[Reserved]
25


Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
26


Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
40


Item 8.
Financial Statements and Supplementary Data
41


Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
86


Item 9A.
Controls and Procedures
86


Item 9B.
Other Information
89


Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
89


 
 
 


PART III
90


Item 10.
Directors, Executive Officers, and Corporate Governance
90


Item 11.
Executive Compensation
90


Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
90


Item 13.
Certain Relationships and Related Transactions, and Director Independence
90


Item 14.
Principal Accountant Fees and Services
90


 
 
 


PART IV
91


Item 15.
Exhibits, Financial Statement Schedules
91


Item 16.
Form 10-K Summary
95


 
 
 
 

 
PART I
Item 1. Business
Cautionary Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our future operations and prospects, including statements that are based on current projections and expectations about the markets in which we operate, and management's beliefs concerning future performance and capital requirements based upon current available information. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this document, words like "may," "might," "will," "expect," "anticipate," "plan," "believe," "potential," and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from management's current expectations. For example, there can be no assurance that additional capital will not be required, and that such amounts may be material, or that additional capital, if required, will be available on reasonable terms, if at all, at such times and in such amounts as may be needed by us. In addition to these factors, among other factors that could cause actual results to differ materially, are uncertainties relating to the general economic conditions affecting our business segments; severe disruptions to the economy, the financial markets, and the markets in which we compete; dependence of certain of our businesses on certain key customers; and the risk that we will not realize all of the anticipated benefits from efforts to optimize our asset base, as well as competitive factors relating to the aerospace industry. For a more detailed discussion of these and other factors affecting us, see the risk factors described in "Item 1A. Risk Factors." 
General
Triumph Group, Inc. ("Triumph," the "Company," "we," "us," or "our") was incorporated in 1993 in Delaware. Our companies design, engineer, manufacture, repair, and overhaul a broad portfolio of aerospace and defense systems, subsystems, components, and structures. We serve the global aviation industry, including original equipment manufacturers (“OEMs”) and the full spectrum of military and commercial aircraft operators through the aircraft life cycle.
Products and Services
We offer a variety of products and services to the aerospace industry through two operating segments: (i) Triumph Systems & Support, whose companies design, develop, and support proprietary components, subsystems, and systems; produce complex assemblies using external designs; and provide full life cycle solutions for commercial, regional, and military aircraft and (ii) Triumph Interiors, whose companies supply commercial, business, regional, and military manufacturers with insulation parts, interior and composite components to Triumph and customer designs, and the manufacture of thermo-acoustic insulation, environmental control system ducting, and other aircraft interior components for major aerospace OEMs.   We also maintain full  maintenance, repair, and overhaul capabilities for all Triumph products across Systems & Support and Interiors, including the manufacture of spare parts. 
Systems & Support’s capabilities include landing gear-system design; hydraulic, mechanical, and electromechanical actuation; hydraulic power generation and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive thermal systems including vapor cycle systems and heat exchangers; and fuel pumps, fuel metering units, and full authority digital electronic control fuel systems.
The products and capabilities within this group include the design, manufacture, build and repair of:
 







Aircraft and engine-mounted accessory drives
 
Thermal control systems and components


Cargo hooks
 
High lift and utility actuation


Cockpit control levers
 
Hydraulic systems and components


Control system valve bodies
 
Landing gear actuation systems


Electronic engine controls
 
Landing gear components and assemblies


Cyber protected process controllers
 
Main engine gear box assemblies


Geared transmissions and drive train components
 
Main fuel pumps and afterburner fuel pumps


Fuel-metering units
 
Vibration absorbers


Interiors products include thermo-acoustic insulation systems, environmental control system ducting, and other aircraft interior components.
4

 
Proprietary Rights
We benefit from our proprietary rights relating to designs, engineering and manufacturing processes, and repair and overhaul procedures. For some products, our unique manufacturing capabilities are required by the customer's specifications or designs, thereby necessitating reliance on us for the production of such specially designed products.
We view our name and trademark as significant to our business as a whole. Our products are protected by a portfolio of patents, trademarks, licenses, or other forms of intellectual property that expire at various dates in the future. We continually develop and acquire new intellectual property and consider all of our intellectual property to be valuable. However, based on the broad scope of our product lines, management believes that the loss or expiration of any single intellectual property right would not have a material adverse effect on our results of operations, our financial position, or our business segments. Our policy is to file applications and obtain patents for our new products as appropriate, including product modifications and improvements. While patents generally expire 20 years after the patent application filing date, new patents are issued to us on a regular basis.
Sales, Marketing, and Engineering
Each of our operating companies maintains responsibility for selling and marketing its specific products. These businesses are responsible for selling aerospace engineered products, integrated assemblies, cabin acoustic insulation and repair and overhaul services, reaching across our operating companies, to our OEM, military, airline, and air cargo customers. In certain limited cases, we use independent, commission-based representatives to serve our customers' changing needs in some of the markets and geographic regions in which we operate. 
Triumph has established multiple Customer Focus Teams ("CFT"), which are cross functional teams focused on Triumph’s activities, performance, growth plans and coordination with large customers. 
Our business development teams and CFTs operate as the front end of the selling process, establishing and maintaining relationships, identifying opportunities to leverage our brand, and providing service for our customers. We meet our customers’ needs by designing systems that integrate the capabilities of our companies.
A significant portion of our government and defense contracts are awarded on a competitive bidding basis. We generally do not bid or act as the primary contractor but will typically bid and act as a subcontractor on contracts on a fixed-price basis. We generally sell to our other customers on a fixed price, negotiated contract, or purchase order basis.
When subcontracting, there is a risk of nonperformance by our subcontractors, which could lead to disputes regarding quality, cost or impacts to production schedules. Additionally, economic environment changes, natural disasters, trade sanctions, tariffs, budgetary constraints, earthquakes, fires, extreme weather conditions, or pandemics, affecting the prime contractor and our subcontractors may adversely affect their ability to meet or support our performance requirements, or may constrain our supply chain.
Backlog
We have a number of long-term agreements with several of our customers. These agreements generally describe the terms under which the customer may issue purchase orders to buy our products and services during the term of the agreement. These terms typically include a list of the products or repair services customers may purchase, initial pricing, anticipated quantities and, to the extent known, delivery dates. In tracking and reporting our backlog, however, we include amounts for which we have actual purchase orders with firm delivery dates or contract requirements within the next 24 months, and, for Interiors, whose sales are driven primarily by long-term agreements with Boeing and Airbus, we also include an estimate of expected purchase orders with anticipated delivery dates or contract requirements within the next 24 months.  Our backlog primarily relates to sales to our OEM customer base as purchase orders issued by our aftermarket customers are usually completed within a short period of time. As a result, our backlog data relates primarily to the OEM customers. Other than the estimate of expected purchase orders for Interiors, the backlog information set forth below does not include the sales that we expect to generate from long-term agreements for which we do not have actual purchase orders with firm delivery dates. 
As of March 31, 2024, our backlog was approximately $1.90 billion, of which $1.56 billion and $0.34 billion related to Systems & Support and Interiors, respectively, including approximately $0.31 billion of Interiors backlog that is based on expected purchase orders from major customers. As of March 31, 2023, our backlog was approximately $1.55 billion, of which $1.29 billion and $0.26 billion related to Systems & Support and Interiors, respectively, including approximately $0.22 billion of Interiors backlog that is based on expected purchase orders from major customers. Of the existing backlog of $1.90 billion, we estimate approximately $1.15 billion will be shipped by March 31, 2025.  Refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for further information on our backlog.
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Dependence on Significant Customers
As disclosed below in Note 18 to the consolidated financial statements, a significant portion of our net sales are to the Boeing Company (“Boeing”).  Refer to Note 18 for specific disclosure of the concentration of net sales and accounts receivable to Boeing.  A significant reduction in sales to Boeing may have a material adverse impact on our financial position, results of operations, and cash flows.
Competition
We compete primarily with Tier 1 and Tier 2 systems suppliers and component manufacturers, some of which are divisions or subsidiaries of other large companies, in the manufacture of aircraft, systems components, and subassemblies.
Competition for the repair and overhaul of aviation components comes from four primary sources, some of whom possess greater financial and other resources than we have and, as a result, may be in a better position to handle the current environment: OEMs, major commercial airlines, government support depots, and independent repair and overhaul companies. Some major commercial airlines continue to own and operate their own service centers, while others sell or outsource their repair and overhaul services to other aircraft operators or third parties. Large domestic and foreign airlines that provide repair and overhaul services typically provide these services not only for their own aircraft but for other airlines as well. OEMs also maintain service centers that provide repair and overhaul services for the components they manufacture. Many governments maintain aircraft support depots in their military organizations that maintain and repair the aircraft they operate. Independent service organizations also compete for the repair and overhaul business of other users of aircraft components. Due to the proprietary nature of our products, these competitors and other parties often source their component spare parts from us.
Participants in the aerospace industry compete primarily on the basis of breadth of technical capabilities, quality, delivery performance, capacity, and price.
Government Regulation, Including Environmental Regulations and Industry Oversight
Government Regulation and Industry Oversight
The aerospace industry is highly regulated in the United States by the Federal Aviation Administration ("FAA") and in other countries by similar agencies. We must be certified by the FAA and, in some cases, by individual OEMs, in order to engineer and service parts and components used in specific aircraft models. If material authorizations or approvals were revoked or suspended, our operations would be adversely affected. New and more stringent government regulations may be adopted, or industry oversight heightened, in the future, and these new regulations, if enacted, or any industry oversight, if heightened, may have an adverse impact on us.
We must also satisfy the requirements of our customers, including OEMs, that are subject to FAA regulations, and provide these customers with products and repair services that comply with the government regulations applicable to aircraft components used in commercial flight operations. The FAA regulates commercial flight operations and requires that aircraft components meet its stringent standards. In addition, the FAA requires that various maintenance routines be performed on aircraft components, and we currently satisfy these maintenance standards in our repair and overhaul services. 
Generally, the FAA only grants approvals for the manufacture or repair of a specific aircraft component. The FAA approval process may be costly and time-consuming. In order to obtain an FAA Air Agency Certificate, an applicant must satisfy all applicable regulations of the FAA governing repair stations. These regulations require that an applicant have experienced personnel, inspection systems, suitable facilities, and equipment. In addition, the applicant must demonstrate a need for the certificate. An applicant must procure manufacturer’s repair manuals from design approval holders, including Triumph when applicable, relating to each particular aircraft component. Because of these regulatory requirements, the application process may involve substantial cost.
The certification processes for the European Aviation Safety Agency ("EASA"), which regulates this industry in the European Union; the Civil Aviation Administration of China; and other comparable foreign regulatory authorities, are similarly stringent, involving potentially lengthy audits. EASA was formed in 2002 and is handling most of the responsibilities of the national aviation authorities in Europe, such as the United Kingdom Civil Aviation Authority.
Our operations are also subject to a variety of worker and community safety laws. For example, the Occupational Safety and Health Act of 1970 ("OSHA") mandates general requirements for safe workplaces for all employees in the United States. In addition, OSHA provides special procedures and measures for the handling of hazardous and toxic substances. Specific safety standards have been promulgated for workplaces engaged in the treatment, disposal, or storage of hazardous waste. We believe that our operations are in material compliance with OSHA's health and safety requirements.
Environmental Regulation
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Our business, operations, and facilities are subject to numerous stringent federal, state, local, and foreign environmental laws and regulations by government agencies, including the Environmental Protection Agency ("EPA"). Among other matters, these regulatory authorities impose requirements that regulate the emission, discharge, generation, management, transportation and disposal of hazardous materials, pollutants, and contaminants; govern public and private response actions to hazardous or regulated substances which may be or have been released to the environment; and require us to obtain and maintain licenses and permits in connection with our operations. This extensive regulatory framework imposes significant compliance burdens and risks on us. Although management believes that our operations and our facilities are in material compliance with such laws and regulations, future changes in these laws, regulations, or interpretations thereof or the nature of our operations or regulatory enforcement actions which may arise may require us to make significant additional capital expenditures to ensure ongoing compliance or engage in remedial actions.
Certain of our facilities, including facilities acquired and operated by us or one of our subsidiaries, have at one time or another been under active investigation for environmental contamination by federal or state agencies when acquired, and at least in some cases, continue to be under investigation or subject to remediation. We are frequently indemnified by prior owners or operators and/or present owners of the facilities for liabilities that we incur as a result of these investigations and the environmental contamination found that predates our acquisition of these facilities, subject to certain limitations. We also maintain a pollution liability policy that provides coverage for certain material liabilities associated with the cleanup of on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in each case, to the extent not otherwise indemnified. This policy applies to all of our manufacturing and assembly operations worldwide. Also, the need for remediation for potential environmental contamination could be identified at facilities formerly owned by us that have been divested as part of restructuring and related initiatives, and such obligations could be material. If we are required to pay the expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a material adverse effect on us.
On March 6, 2024, the Securities and Exchange Commission (the "SEC") adopted rules to enhance and standardize climate-related disclosures by public companies and in public offerings.  The new rules require disclosures about material climate-related risks, how the board of directors and management oversee and manage the risks, and the actual and potential impact of the risks. The rules also require disclosure about material climate-related targets and goals and Scope 1 and Scope 2 greenhouse gas ("GHG") emissions, among other things. These climate-related disclosures will be required in annual reports and registration statements. 
With the exception of Scope 1 and Scope 2 GHG emissions disclosures, we will be required to comply with the new rules beginning in fiscal 2026.  We will be required to comply Scope 1 and Scope 2 GHG emissions disclosure requirements beginning in fiscal 2027. Under the new rules, our disclosure of Scope 1 and Scope 2 GHG emissions will initially be subject to limited assurance beginning in fiscal 2030 and reasonable assurance beginning in fiscal 2034.  We are not able to predict the full impact these rules will have on our business, operations or financial results.
On April 4, 2024, the SEC issued a stay on the new rules pending the completion of judicial review.
There have not been, and we do not expect there to be in the near term, material impacts on our business, financial condition or results of operations as a result of compliance with legislation or regulatory rules regarding climate change, including those adopted by the SEC on March 6, 2024; from the known physical effects of climate change; or as a result of supporting our environmental, social, and governance ("ESG") initiatives. Further increases in regulation and other climate change concerns, however, could subject us to additional costs and restrictions, and we are not able to predict how such regulations or concerns would affect our business, operations or financial results.
Human Capital Resources
Our success greatly depends on identifying, attracting, engaging, developing, and retaining a highly skilled workforce in multiple areas, including engineering, manufacturing, information technology, cybersecurity, business development, finance, and strategy and management.  Our human capital management strategy places significant importance on attracting and developing a talented and diverse workforce by creating a workplace that is engaging and inclusive and promotes a culture of innovation, excellence, and continuous improvement. The objectives of our human capital management strategy are aligned with and support our strategic and financial goals. 
We use a wide variety of human capital measures in managing our business, including workforce demographics and diversity metrics; talent acquisition, retention, and development metrics; and employee safety and health metrics. 
Diversity and Workforce Demographics
We value the diversity of our workforce and believe that the best innovation and business results are achieved when teams are populated with individuals from a diverse set of backgrounds, cultures, genders, and experiences. We have a Diversity & Inclusion Steering Committee (“DISC”) committed to creating an environment in which all employees feel valued, included, and empowered 
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to share their unique experiences, perspectives, and viewpoints.  We believe this is critical to the success of our business and the delivery of world class manufacturing, engineering, and aerospace services.  We track the diversity of our leadership and workforce and review our progress toward our diversity objectives with the Company’s Board of Directors on a periodic basis.  Across our total employee population and based on employees who self-identify, as of March 31, 2024, approximately 38% of our global workforce are female.  Of our employees based in the United States, who have self-identified, approximately 22% are multicultural and 10% are veterans. 
Several of our subsidiaries are parties to collective bargaining agreements with labor unions. Under those agreements, we currently employ approximately 469 full-time employees. Currently, approximately 10% of our 4,530 permanent employees are represented by labor unions and approximately 34% of net sales are derived from the facilities at which at least some employees are unionized. Of the 469 employees represented by unions, no employees are working under contracts that have expired.
Our inability to negotiate an acceptable contract with any of our labor unions could result in strikes by the affected workers and increased operating costs as a result of higher wages or benefits paid to union members. If the unionized workers were to engage in a strike or other work stoppage, or if other employees were to become unionized, we could experience a significant disruption of our operations and higher ongoing labor costs, which could have an adverse effect on our business and results of operations.
Talent Acquisition, Retention, and Development
Hiring, developing, and retaining talented employees, particularly in highly technical areas, is an integral part of our human capital management.  In addition to our focus on recruitment, we monitor attrition rates, including with respect to top talent.  We believe that the commitment and connection of employees to their workplace, what we refer to as employee engagement, is a critical component of retention of top talent.  We periodically conduct surveys of our workforce designed to gauge “employee engagement”.  Our Employee Engagement Team monitors the responses to these surveys in our pursuit of continuously improving our employee engagement metrics.  We also continue to invest in technology that supports the effectiveness, efficiency, and engagement of our employees, including advancement with our human resources information systems, communication tools and processes. 
We also attract and reward our employees by providing market-competitive compensation and benefit practices that cover the many facets of health, including resources and programs designed to support physical, mental, and financial wellness. We also provide tuition reimbursement and other educational and training opportunities to our employees.
Employee Safety and Health
Ensuring the safety of our employees is a top priority for us. Our safety and health program seeks to enhance business value by creating a safe and healthy work environment, promote the resiliency of our workforce and engage our employees.  We provide health and safety guidance and resources to all of our businesses in order to ensure occupational safety, reduce risk, and prevent incidents. Our values include the commitment of each person to creating a safe work environment for themselves and their team members, and, through various programs and activities, we recognize individuals in our organization who make significant contributions to workplace safety. 
We monitor the effectiveness of our safety and health program by comparing recordable incidents and incident severity to specific performance metrics established annually.  We measure the volume of safety incidents through the total recordable incident rate (“TRIR”) metric, and we measure incident severity through the days away restricted and transferred (“DART”) metric across all of our facilities.  These rates are measured on a calendar year basis, and the table below reflects our results over the three most recent calendar years:

















 
 
Calendar year ended
 


Safety Metric
 
2023
 
 
2022
 
 
2021
 


TRIR
 
 
0.8
 
 
 
1.2
 
 
 
1.8
 


DART
 
 
0.2
 
 
 
0.5
 
 
 
1.0
 


TRIR = total number of recordable cases x 200,000 / total hours worked
 


DART = number of cases with days away from work x 200,000 / total hours worked by all employees
 


Community Service and Philanthropy
Since 2011, we have demonstrated a deep dedication to corporate citizenship through our Wings community outreach program. Through Wings, based on the needs of their communities, our employees around the world create and implement service projects by partnering with local nonprofit organizations and engage in meaningful volunteer projects that directly benefit local charities committed to serving the needs of others. The Company enjoys partnering in local communities, and team-based volunteer events help bring our employees together as one team serving its communities.  We provide our employees up to 8 hours paid vacation so that they may volunteer with charitable or community-enrichment organizations. 
In 2008, the Triumph Group Charitable Foundation was formed and funded. In fiscal year of 2024, the Triumph Group Charitable Foundation allocated approximately $0.3 million to approximately 100 recipient organizations.  These organizations were principally nominated by our employees.  The Triumph Group Charitable Foundation makes contributions to organizations that are 
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focused on improving our communities; supporting veterans and military families; and advancing education, particularly in the areas of science, technology, engineering, and mathematics (“STEM”). 
Executive Officers
Our current executive officers are:
 









Name
 
Age
 
Position


Daniel J. Crowley
 
61
 
Chairman, President and Chief Executive Officer


James F. McCabe, Jr.
 
61
 
Senior Vice President, Chief Financial Officer


Jennifer H. Allen
 
52
 
Senior Vice President, Chief Administrative Officer, General Counsel and Secretary


Thomas A. Quigley, III
 
47
 
Vice President, Investor Relations, Mergers & Acquisitions and Treasurer


Kai W. Kasiguran
 
38
 
Vice President, Controller 


 
Daniel J. Crowley was appointed President and Chief Executive Officer and a director of the Company on January 4, 2016. He was elected Chair of the Board of Directors of the Company on November 17, 2020. Mr. Crowley was elected as an independent director to Knowles Corporation’s Board of Directors on July 26, 2022. Previously, Mr. Crowley served as a corporate vice president and President of Integrated Defense Systems at Raytheon Company from 2013 until 2015, and as President of Network Centric Systems at Raytheon Company from 2010 until 2013. Prior to joining Raytheon Company, Mr. Crowley served as Chief Operating Officer of Lockheed Martin Aeronautics after holding a series of increasingly responsible assignments across its space, electronics, and aeronautics sectors.
James F. McCabe, Jr. has been our Senior Vice President and Chief Financial Officer since August 2016. He joined the Company from Steel Partners Holdings, where he served in a number of roles from 2007 to 2016, including the following: Senior Vice President and CFO, President, Shared Services, and Senior Vice President and CFO of its affiliates Handy & Harman and Steel Excel. Prior to joining Steel Partners Holdings, Mr. McCabe served as Vice President, Finance and Treasurer of American Water’s Northeast Region from 2004 to 2007, and President and CFO of Teleflex Aerospace from 1991 to 2003, which served the global aviation industry. He has previously qualified as a certified public accountant and Six Sigma Green Belt and served as a member of the Board of Governors and the Civil Aviation Council Executive Committee for the Aerospace Industries Association.
Jennifer H. Allen has been a Senior Vice President and our Chief Administrative Officer, General Counsel and Secretary since September 2018. She joined Triumph Group from CIRCOR International, Inc., where she was Senior Vice President, General Counsel & Secretary from 2016 to 2018.  Previously, she was Vice President & Associate General Counsel – Corporate for BAE Systems, Inc., from 2010 to 2016, a member of the mergers and acquisition group in the New York office of Jones Day from 2005 to 2010, and a member of the business and finance group in the Philadelphia office of Morgan, Lewis & Bockius LLP from 1996 to 2001.
Thomas A. Quigley, III has been our Vice President, Investor Relations, Mergers & Acquisitions and Treasurer since September 2022. From December 2019 to September 2022, Mr. Quigley served as our Vice President, Investor Relations and Controller. From November 2012 to December 2019, Mr. Quigley served as our Vice President and Controller, and served as the Company's principal accounting officer. Mr. Quigley previously served as the Company's SEC Reporting Manager from 2009 to 2012. From 2002 until joining Triumph in 2009, Mr. Quigley held various roles within the audit practice of KPMG LLP, including Senior Audit Manager.
Kai W. Kasiguran was appointed our Vice President, Controller and Principal Accounting Officer in September 2022. Mr. Kasiguran previously served in a variety of roles at the Company from 2018 to 2022, most recently as the Company’s Assistant Controller, Corporate. From 2011 until joining the Company in 2018, Mr. Kasiguran held various roles within the audit practice of Ernst & Young, LLP, including Senior Audit Manager.
Recent Developments
As disclosed in Note 3, in December 2023 we entered into a definitive agreement with AAR CORP. (“AAR”), to sell Systems & Support's maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support”).  The capabilities of Product Support included providing maintenance, repair and overhaul ("MRO") services for the global commercial, regional, and military operators of aircraft components. As a result of this transaction, effective in the third quarter of fiscal 2024, we have classified the Product Support results of operations for all periods presented as discontinued operations, have classified the assets and liabilities of the disposal group as held for sale as of March 31, 2023, and these operations are no longer reported as part of the Systems & Support reportable segment. As a result, and unless specifically stated, all discussions within Management's Discussion and Analysis of Financial Condition and Results of Operations regarding results for the fiscal years ended March 31, 2024, 2023, and 2022, reflect 
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results from our continuing operations.  The divestiture of Product Support closed on March 1, 2024, and the Company recognized a gain of approximately $548.3 million.  Refer to Note 3 for further disclosure.
On March 4, 2024, we completed the redemption of $120.0 million of our 2028 First Lien Notes (as defined in Note 10) for approximately $128.7 million, reflecting a redemption price of 103% of the aggregate principal amount plus accrued and unpaid interest.  On March 5, 2024, pursuant to an offer made in accordance with the provisions of the indenture governing the 2028 First Lien Notes to purchase 2028 First Lien Notes for cash, we settled the asset sale tender offer of approximately $1.1 million of our 2028 First Lien Notes for $1.2 million reflecting a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest.  On March 6, 2024, we redeemed the remaining outstanding $435.6 million of 2025 Notes (as defined in Note 10) for approximately $437.6 million reflecting a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest.  As a result of these redemptions, we reduced our long-term debt by approximately $556.7 million.
On May 30, 2024, we completed the redemption of $120.0 million of our 2028 First Lien Notes at a redemption price equal to 103.000% of the principal amount redeemed plus accrued and unpaid interest to, but not including, the redemption date. 
Available Information
For more information about us, visit our website at www.triumphgroup.com. The contents of the website are not part of this Annual Report on Form 10-K. Our electronic filings with the Securities and Exchange Commission ("SEC") (including Forms 10-K, 10-Q and 8-K, proxy statements, on Schedule 14A, and any amendments to these reports) are available free of charge through our website as soon as reasonably practicable after we electronically file with or furnish them to the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers who file electronically with the SEC at www.sec.gov.
In addition, electronic copies of the Company’s SEC filings will be made available, free of charge, on written request. 
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Item 1A. Risk Factors
Strategic Risks
Strategic risk relates to our future business plans and strategies, including the risks associated with the global macro-environment; competitive threats; the demand for our products and services; the success of our investments in technology and innovation; our portfolio of businesses and capital allocation decisions; dispositions, acquisitions, joint ventures, and restructuring activity; intellectual property; and other risks. 
Factors that have an adverse impact on the aerospace industry may adversely affect our results of operations and liquidity.
A substantial percentage of our gross profit and operating results derive from commercial aviation. Our operations have been focused on designing, engineering, manufacturing, repairing and overhauling a broad portfolio of aircraft components, accessories, subassemblies, and systems. Therefore, our business is directly affected by economic factors and other trends that affect our customers in the aerospace industry, including a possible decrease in outsourcing by OEMs and aircraft operators or projected market growth that may not materialize or be sustainable. We are also significantly dependent on sales to the commercial aerospace market, which has been cyclical in nature with significant downturns in the past. When these economic and other factors adversely affect the aerospace industry, they tend to reduce the overall customer demand for our products and services, which decreases our operating income. Economic and other factors that might affect the aerospace industry such as disruption in the supply chain or high inflation may have an adverse impact on our results of operations and liquidity. In addition, an increase in energy costs and the price of fuel to the airlines could result in additional pressure on the operating costs of airlines. The market for jet fuel is inherently volatile and is subject to, among other things, changes in government policy on jet fuel production; fluctuations in the global supply of crude oil; disruptions in oil production or delivery caused by hostility in oil-producing areas; or potential legislation or strategic initiatives to address climate change by reducing greenhouse gas emissions, creating carbon taxes, or implementing or otherwise participating in cap and trade programs. Airlines are sometimes unable to pass on increases in fuel prices or other costs to customers by increasing fares due to the competitive nature of the airline industry, and this compounds the pressure on operating costs. Other events of general impact such as natural disasters, pandemics, war, terrorist attacks affecting the industry or pandemic health crises may lead to declines in the worldwide aerospace industry that could adversely affect our business and financial condition.
In addition, demand for our maintenance, repair and overhaul services is strongly correlated with worldwide flying activity. A significant portion of the MRO activity required on commercial aircraft is mandated by government regulations that limit the total time or number of flights that may elapse between scheduled MRO events. As a result, although short-term deferrals are possible, MRO activity is ultimately required to continue to operate the aircraft in revenue-producing service. Therefore, over the intermediate and long term, trends in the MRO market are closely related to the size and utilization level of the worldwide aircraft fleet, as reflected by the number of available seat miles, commonly referred to as ASMs, and cargo-ton miles flown. Consequently, conditions or events that contribute to declines in worldwide ASMs and cargo miles flown, such as those mentioned above, could negatively impact our MRO business.
Changes in levels of U.S. Government defense spending or overall acquisition priorities could negatively impact our financial position and results of operations.
We derive a significant portion of our revenue from the U.S. Government, primarily from defense-related programs with the U.S. Department of Defense (“U.S. DoD”). Levels of U.S. defense spending are very difficult to predict and may be impacted by numerous factors such as the political environment, U.S. foreign policy, macroeconomic conditions, ongoing or emerging geopolitical conflicts such as conflict between Russia and Ukraine or Israel and Hamas, and the ability of the U.S. Government to enact relevant legislation such as authorization and appropriations bills. Accordingly, long-term uncertainty remains with respect to overall levels of defense spending and it is likely that U.S. Government discretionary spending levels will continue to be subject to pressure.
In addition, there continues to be uncertainty with respect to program-level appropriations for the U.S. DoD and other government agencies within the overall budgetary framework described above. While the House and Senate Appropriations committees included funding for major military programs in fiscal year 2025, such as the F-35, CH-47 Chinook, AH-64 Apache, KC-46A Tanker, UH-60 Black Hawk, and V-22 Osprey programs, uncertainty remains about how defense budgets in fiscal year 2026 and beyond will affect these programs. Future budget cuts associated with the authorizations and appropriations process could result in reductions, cancellations, and/or delays of existing contracts or programs. Any of these impacts could have a material effect on the results of our operations, financial position and/or cash flows.
In addition, as a result of the significant ongoing uncertainty with respect to both U.S. defense spending levels and the nature of the threat environment, we expect the U.S. DoD to continue to emphasize cost-cutting and other efficiency initiatives in its 
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procurement processes. If we can no longer adjust successfully to these changing acquisition priorities and/or fail to meet affordability targets set by the U.S. DoD customer, our revenues and market share would be further impacted.
The profitability of certain development and production programs depends significantly on the assumptions surrounding satisfactory settlement of claims and assertions.
For certain of our new development programs, we regularly commence work or incorporate customer-requested changes prior to negotiating pricing terms for engineering work or the product which has been modified. We typically have the contractual right to negotiate pricing for customer-directed changes. In those cases, we assert to our customers our contractual rights to obtain the additional revenue or cost reimbursement we expect to receive upon finalizing pricing terms. An expected recovery value of these assertions is incorporated into our contract profitability estimates when applying contract accounting. Our inability to recover these expected values, among other factors, could result in the recognition of a forward loss on these programs or a lower than expected profit margin and could have a material adverse effect on our results of operations. 
Throughout the course of our programs, disputes with suppliers or customers could arise regarding unique contractual requirements, quality, costs or impacts to production schedules.  If we are unable to successfully and equitably resolve such claims and assertions, our business, financial condition, results of operations, customer relationships and related transactions could be materially adversely affected.
In addition, negotiations over our claims may lead to disputes with our customers that would result in litigation and its associated costs and risks of damages, penalties and injunctive relief, any of which could have a material, adverse effect on our business and results of operations.
Implementing new programs and technologies subjects us to operational uncertainty.
New programs with new technologies typically carry risks associated with design responsibility, development of new production tools, hiring and training of qualified personnel, increased capital and funding commitments, ability to meet customer specifications, delivery schedules and unique contractual requirements, supplier performance, subcontractor performance, ability of the customer to meet its contractual obligations to us, and our ability to accurately estimate costs associated with such programs. In addition, any new aircraft program may not generate sufficient demand or may experience technological problems or significant delays in the regulatory certification or manufacturing and delivery schedule. If we were unable to perform our obligations under new programs to the customer's satisfaction or manufacture products at our estimated costs, if we were to experience unexpected fluctuations in raw material prices or other fluctuations in supplier costs leading to cost overruns, if we were unable to successfully perform under revised design and manufacturing plans or successfully and equitably resolve claims and assertions, or if a new program in which we had made a significant investment was terminated or experienced weak demand, delays or technological problems, our business, financial condition and results of operations could be materially adversely affected. This risk includes the potential for default, quality problems, or inability to meet weight requirements and could result in low margin or forward loss contracts, and the risk of having to write-off inventory or contract assets if they were deemed to be unrecoverable over the life of the program. In addition, beginning new work on existing programs also carries risks associated with the transfer of technology, knowledge and tooling.
Cancellations, reductions or delays in customer orders may adversely affect our results of operations.
Our overall operating results are affected by many factors, including the timing of orders from large customers and the timing of expenditures to manufacture parts and purchase inventory in anticipation of future sales of products and services. A large portion of our operating expenses is relatively fixed. Because several of our operating locations typically do not obtain long-term purchase orders or commitments from our customers, they must anticipate the future volume of orders based upon the historic purchasing patterns of customers and upon our discussions with customers as to their anticipated future requirements. These historic patterns may be disrupted by many factors, including changing economic conditions, inventory adjustments, or work stoppages or labor disruptions at our customers' locations. Cancellations, reductions or delays in orders by a customer or group of customers could have a material adverse effect on our business, financial condition, and results of operations. 
A significant decline in business with a key customer could have a material adverse effect on us.
As disclosed in Note 18, a significant portion of our net sales is to Boeing.  As a result, a significant reduction in purchases by Boeing could have a material adverse impact on our financial condition, results of operations, and cash flows. In addition, some of our individual companies rely significantly on particular customers, the loss of which could have an adverse effect on those businesses. 
Competitive pressures may adversely affect us.
We have numerous competitors in the aerospace industry. We compete primarily with the top-tier systems integrators and the manufacturers that supply them, some of which are divisions or subsidiaries of OEMs and other large companies that manufacture 
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aircraft components and subassemblies. Our OEM customers, which include Boeing, Airbus, BAE, Bell Helicopter, Bombardier, Collins Aerospace, GE Aerospace, Gulfstream, Honeywell, Lockheed Martin, Northrop Grumman, Raytheon, Rolls Royce and Sikorsky, may choose not to outsource production of systems, subsystems, components, or aerostructures due to, among other things, a desire to vertically integrate direct labor and overhead considerations, capacity utilization at their own facilities, or a desire to retain critical or core skills. Consequently, traditional factors affecting competition, such as price and quality of service, may not be significant determinants when OEMs decide whether to produce a part in-house or to outsource. We also face competition from non-OEM component manufacturers, including Parker, Eaton, Honeywell, Transdigm, and Safran. Competition for the repair and overhaul of aviation components comes from three primary sources: OEMs, major commercial airlines and independent repair and overhaul companies.
We may need to expend significant capital to keep pace with technological or climate change related developments in our industry.
The aerospace industry is constantly undergoing development and change, and it is likely that new products, equipment, and methods of repair and overhaul service will be introduced in the future. For example, demand for products that are less carbon-intensive or that align with customers’ sustainability goals is expected to increase as a result of market demand, investor preferences, government legislation, and the aerospace industry’s response risks created by climate change.  Failure to react timely to these trends and manage the Company’s product portfolio and innovation activities responsively could decrease the competitiveness of the Company’s products and result in the de-selection of the Company as a partner of choice. In order to keep pace with any new developments, such as sustainable energy solutions like the accommodation and integration of sustainable aviation fuels (“SAF”); hydrogen fuel; blended wing body aircraft; or other technological developments in our industry, including open rotor concepts and electrification, we may need to expend significant capital to purchase new equipment and machines or to train our employees in the new methods of production and service. In addition, the failure to set goals, take actions, make progress and report against, commensurate with relevant market competitors, our sustainability strategy, could harm our reputation, and our ability to compete and to attract top talent or the deselection of the Company as a partner or supplier of choice.
We may not realize our anticipated return on capital commitments made to expand our capabilities.
We continually make significant capital expenditures to implement new processes and to increase both efficiency and capacity. Some of these projects require additional training for our employees and not all projects may be implemented as anticipated. If any of these projects do not achieve the anticipated increase in efficiency or capacity, our returns on these capital expenditures may be lower than expected.
We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions from restructuring, facility consolidations, realignment, cost reduction and other strategic initiatives.
Over the past several years, we have implemented a number of restructuring, realignment and cost-reduction initiatives, including facility consolidations, organizational realignments and reductions in our workforce. While we have realized some efficiencies from these actions, we may not realize the benefits and synergies of these initiatives to the extent we anticipated. Further, such benefits may be realized later than expected, and the ongoing difficulties in implementing these measures may be greater than anticipated, which could cause us to incur additional costs or result in business disruptions. In addition, if these measures are not successful or sustainable, we may be compelled or decide to undertake additional realignment and cost-reduction efforts, which could result in significant additional charges. Moreover, if our restructuring and realignment efforts prove ineffective, our ability to achieve our other strategic and business plan goals may be adversely affected. 
We do not own certain intellectual property and tooling that is important to our business.
Our business also depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our contracts with our OEM customers. These contracts contain restrictions on our use of the intellectual property and tooling and may be terminated if we violate certain of these restrictions. Our loss of a contract with an OEM customer and the related license rights to use an OEM's intellectual property or tooling could materially adversely affect our business.
The effects of potential future public health crises, epidemics, pandemics or similar events on our business, operating results and cash flows are uncertain.
A pandemic or other health crisis could have a significant negative impact on the U.S. and global economy; disrupt global supply chains; result in significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place”; and create significant disruption of the financial markets, all of which affect the demand for our products and services and could materially impact our financial condition or results of operations. 
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Our business and results of operations could be adversely affected by disruptions in the global economy caused by geopolitical conflicts, related sanctions and other developments.
The ongoing conflicts between Ukraine and Russia or Israel and Hamas, and related political and economic consequences, such as sanctions and other measures imposed by the European Union, the U.S., and other countries and organizations in response, may continue to cause disruption and instability in global markets, supply chains, and industries that directly or indirectly affect the aerospace industry. As a result of these geopolitical conflicts, businesses in the U.S. and globally have experienced shortages in materials and increased costs for transportation, energy, and raw materials, as well as increased risk of cyber attacks, inflationary pressures, and market volatility.  The extent and duration of the war, sanctions, and resulting market disruptions are impossible to predict, and our business and results of operations could be adversely affected.
Operational Risks
Operational risk relates to risks arising from systems, processes, people, and external events that affect the operation of our businesses. It includes risks related to product and service life cycle and execution; product safety and performance; information management and data protection and security, including cybersecurity; and supply chain and business disruption.
Our business could be negatively affected by cyber or other security threats or other disruptions.
Our businesses depend heavily on information technology and computerized systems to communicate and operate effectively. Our systems and technologies, or those of third parties on which we rely, could fail or become unreliable due to equipment failures, software viruses, cyber threats, terrorist acts, natural disasters, power failures or other causes. These threats arise in some cases as a result of our role as a defense contractor. Our customers, including the U.S. Government, are increasingly requiring cybersecurity protections and mandating cybersecurity standards in our products, and we may incur additional cost to comply with such demands.
We have faced and may continue to face cybersecurity threats. These cybersecurity threats are evolving and include, but are not limited to, malicious software; ransomware; attempts to gain unauthorized access to our sensitive information, including that of our customers, suppliers, subcontractors, and joint venture partners; and other electronic security breaches that could lead to disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information and corruption of data.
Our systems are decentralized, which presents various risks, including the risk that we may be slower or less able to identify or react to problems affecting a business function than we would be in a more centralized, enhanced environment. In addition, “company-wide” business initiatives, such as the integration of information technology systems, carry a higher risk of failure. Depending on the nature of the initiative, such failure could result in loss of revenues, product development delays, compromise, corruption or loss of confidential, proprietary or sensitive information (including personal information or technical business information), remediation costs, indemnity obligations and other potential liabilities, regulatory or government action, breach of contract claims, contract termination, class action or individual lawsuits from affected parties, negative media attention, reputational damage, and loss of confidence from our government clients.
If any of these events were to materialize, the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified and could have a material adverse effect on our reputation, operating results and financial condition.
Any significant disruption from key suppliers of raw materials and key components could delay production and decrease revenue.
We are highly dependent on the availability of essential raw materials such as metallics and composites, and purchased engineered component parts and special processes from our suppliers, many of which are available only from single customer-approved sources. Moreover, we are dependent upon the ability of our suppliers to provide raw materials and components that meet our specifications, quality standards and delivery schedules. Our suppliers' failure to provide expected raw materials or component parts could require us to identify and enter into contracts with alternate suppliers that are acceptable to both us and our customers, which could result in significant delays, expenses, increased costs, and management distraction and adversely affect production schedules and contract profitability.
We have from time to time experienced limited interruptions of supply, and we may experience a significant interruption in the future. Our continued supply of raw materials and component parts is subject to a number of risks, including:
•availability of capital to our suppliers;
•workforce shortages at our suppliers;
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•the destruction of our suppliers' facilities or their distribution infrastructure;
•a work stoppage or strike by our suppliers' employees;
•the failure of our suppliers to provide raw materials or component parts of the requisite quality;
•the failure of essential equipment at our suppliers' plants;
•the failure or shortage of supply of raw materials to our suppliers;
•contractual amendments and disputes with our suppliers;
•reduction to credit terms; and
•geopolitical conditions in the global supply base.
In addition, some contracts with our suppliers for raw materials, component parts and other goods are short-term contracts, which are subject to termination on a relatively short-term basis. The prices of our raw materials and component parts fluctuate depending on market conditions, including inflationary pressures, and substantial increases in prices could increase our operating costs, which, as a result of our fixed-price contracts, we may not be able to recoup through increases in the prices of our products.
Due to economic difficulty, we may face pressure to renegotiate agreements resulting in lower margins. Our suppliers may discontinue the provision of products to us at attractive prices or at all, and we may not be able to obtain such products in the future from these or other providers on the scale and within the time periods we require. Furthermore, substitute raw materials or component parts may not meet the strict specifications and quality standards we and our customers demand, or that the U.S. Government requires. Additionally, climate change increases the risk of potential supply chain and operational disruptions from weather events and natural disasters. The chronic physical impacts associated with climate change, for example, increased temperatures, changes in weather patterns, and rising sea levels, could significantly increase costs and expenses and create additional supply chain and operational disruption risks. If we are not able to obtain key products on a timely basis and at an affordable cost, or we experience significant delays or interruptions of their supply, revenues from sales of products that use these supplies will decrease. 
Significant consolidation by aerospace industry suppliers could adversely affect our business.
The aerospace industry continues to experience consolidation among suppliers and customers. The supplier consolidation is in part attributable to aircraft manufacturers more frequently awarding long-term sole-source or preferred supplier contracts to the most capable suppliers, thus reducing the total number of suppliers. This consolidation could cause us to compete against certain competitors with greater financial resources, market penetration and purchasing power. When we purchase component parts and services from suppliers to manufacture our products, consolidation reduces price competition between our suppliers, which could diminish incentives for our suppliers to reduce prices. If this consolidation continues, our operating costs could increase, and it may become more difficult for us to be successful in retaining key customers. 
Our business could be materially adversely affected by product warranty obligations or disposition related obligations.
Our operations expose us to potential liability for warranty claims made by customers or third parties with respect to aircraft components that have been designed, manufactured, or serviced by us or our suppliers. We have in the past and from time to time have ongoing dialogue with our customers regarding warranty claims. Material product warranty obligations could have a material adverse effect on our business, financial condition and results of operations.
As part of the transformation of our business over the last decade, we have engaged in a number of dispositions. Dispositions involve a number of risks and present financial, managerial and operational challenges, including diversion of management attention from running our core businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses, potential disputes with the acquirers of the disposed businesses and potential losses, write-downs or other adverse impacts on our financial statements or results of operations. As a result, we may not realize some or all of the anticipated benefits of our dispositions. For further information on commitments and contingencies, see Note 17. 
Any product liability claims in excess of insurance may adversely affect our financial condition.
Our operations expose us to potential liability for personal injury or death as a result of the failure of an aircraft component that has been serviced by us or the failure of an aircraft component designed or manufactured by us. While we believe that our liability insurance is adequate to protect us from these liabilities, our insurance may not cover all liabilities. Additionally, should insurance market conditions change, general aviation product liability, insurance coverage may not be available in the future at a cost acceptable to us. Any material liability not covered by insurance or for which third-party indemnification is not available could have a material adverse effect on our financial condition. 
The lack of available skilled personnel may have an adverse effect on our operations.
From time to time, some of our operating locations have experienced difficulties in attracting and retaining skilled personnel to design, engineer, manufacture, repair and overhaul sophisticated aircraft components, and this risk can be higher during periods 
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of high inflation due to resulting pressure on wages. Our ability to operate successfully could be jeopardized if we are unable to attract and retain a sufficient number of skilled personnel to conduct our business.
Our fixed-price contracts may commit us to unfavorable terms.
A significant portion of our net sales is derived from fixed-price contracts under which we have agreed to supply components systems or services for a price determined on the date we entered into the contract. Contract terms vary but are generally less than five years in length. Several factors may cause the costs we incur in fulfilling these contracts to vary substantially from our original estimates, and we generally bear the majority of risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on these contracts. In a fixed-price contract, we may be required to fully absorb cost overruns, notwithstanding the difficulty of estimating all of the costs we will incur in performing these contracts. This risk is greater in periods of high inflation.  Because our ability to terminate contracts is generally limited, we may not be able to terminate our performance requirements under these contracts at all or without substantial liability and, therefore, in the event we are sustaining reduced profits or losses, we could continue to sustain these reduced profits or losses for the duration of the contract term. Our failure to anticipate technical problems, estimate delivery reductions, estimate costs accurately or control costs during performance of a fixed-price contract may reduce our profitability or cause significant losses on programs.
Due to the size and long-term nature of many of our contracts, we are required by GAAP to estimate sales and expenses relating to these contracts in our financial statements, which may cause actual results to differ materially from those estimated under different assumptions or conditions.
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). These principles require our management to make estimates and assumptions regarding our contracts that affect the reported amounts of revenue and expenses during the reporting period. Accounting for revenue recognized over time requires judgment relative to assessing risks, estimating contract sales and costs, and making assumptions for schedule and technical issues. Due to the nature of certain of our contracts, the estimation of total sales and cost at completion is complicated and subject to many variables. While we base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances at the time made, actual results may differ materially from those estimated.
Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production.
Our manufacturing facilities or our customers' facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity. We maintain property damage and business interruption insurance at the levels typical in our industry or for our customers and suppliers, however, a pandemic or other major catastrophe, such as an earthquake, hurricane, fire, flood, tornado or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant delays in shipments of products and the loss of sales and customers, and we may not have insurance to adequately compensate us for any of these events. For leased facilities, timely renewal of leases and risk mitigation from the sale of our leased facilities is required to avoid any business interruption.
We may be subject to work stoppages at our facilities or those of our principal customers and suppliers, which could seriously impact the profitability of our business.
Our unionized workforces and those of our customers and suppliers may experience work stoppages during collective bargaining agreement negotiations. If we are unable to negotiate a contract with those workforces, our operations may be disrupted, and we may be prevented from completing production and delivery of products from those facilities, which would negatively impact our results. Contingency plans have been developed that would allow production to continue in the event of a strike.
Financial Risks 
Financial risk relates to our ability to meet financial obligations and mitigate exposure to broad market risks, including funding and liquidity risks, such as risk related to our credit ratings and our availability and cost of funding; credit risk; inflation risk, and volatility in foreign currency exchange rates, interest rates, and commodity prices. Liquidity risk refers to the potential inability to meet contractual or contingent financial obligations (whether on- or off-balance sheet) as they arise and could potentially impact 
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our financial condition or overall safety and soundness. Credit risk is the risk of financial loss arising from a customer or counterparty failure to meet its contractual obligations to us. 
Our debt could adversely affect our financial condition and our ability to operate and grow our business. The terms of the indenture governing our 9.000% Senior Secured First Lien Notes due 2028 (the "2028 First Lien Notes") impose significant operating and financial restrictions on us and our subsidiaries, which could also adversely affect our operating flexibility and put us at a competitive disadvantage by preventing us from capitalizing on business opportunities and additional financing may not be available on terms acceptable to us.
The terms of the indenture governing our 2028 First Lien Notes and our receivables securitization facility (the "Securitization Facility") impose significant operating and financial restrictions on us and require us to comply with various financial and other covenants, which, among other things, limit our ability to incur additional indebtedness, create liens, dispose of assets, and enter into certain transactions. We are in compliance with all of our debt covenants. 
We cannot assure you that we will be able to remain in compliance with such covenants in the future or, if we fail to do so, that we will be able to obtain waivers from the applicable holders of such indebtedness or amend such covenants and other terms of the agreements governing such indebtedness on commercially reasonable terms, if at all. Failure to comply with such covenants will entitle the applicable holders of such indebtedness to exercise remedies, including to require immediate repayment of outstanding amounts and to terminate commitments under such indebtedness, which could have a material adverse effect on our business, operations, and financial condition.
We may need to obtain additional financing in order to meet our debt obligations as they come due, to support our operations and/or to make acquisitions. Our access to the debt capital markets and the cost of borrowings are affected by a number of factors, including market conditions and the strength of our credit ratings.  If we cannot obtain adequate sources of credit on favorable terms, or at all, our business, operations, and financial condition could be adversely affected. We may also seek transactions to extend the maturity of our debt, reduce leverage or obtain covenant flexibility. Such transactions could result in us incurring additional secured debt or issuing additional equity, which could increase the risks described above. 
Volatility in the financial markets may impede our ability to successfully access capital markets and ensure adequate liquidity and may adversely affect our customers and suppliers.
Turmoil in the capital markets may impede our ability to access the capital markets when we would like, or need, to raise capital or may restrict our ability to borrow money on favorable terms. Such market conditions could have an adverse impact on our flexibility to react to changing economic and business conditions and on our ability to fund our operations and capital expenditures in the future. In addition, interest rate fluctuations, financial market volatility, or credit market disruptions may also negatively affect our customers' and our suppliers' ability to obtain credit to finance their businesses on acceptable terms. As a result, our customers' need for and ability to purchase our products or services may decrease, and our suppliers may increase their prices, reduce their output or change their terms of sale. If our customers' or suppliers' operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, our customers may not be able to pay, or may delay payment of, accounts receivable owed to us, and our suppliers may restrict credit or impose different payment terms. Any inability of customers to pay us for our products and services or any demands by suppliers for different payment terms may adversely affect our earnings and cash flow.
Our expansion into international markets may increase credit, currency and other risks, and our current operations in international markets expose us to such risks.
As we pursue customers in Asia, South America and other less developed aerospace markets throughout the world, our inability to ensure the creditworthiness of our customers in these areas could adversely impact our overall profitability. In addition, with operations in China, France, Germany, Mexico, Thailand and the United Kingdom, and customers throughout the world, we are subject to the legal, political, social and regulatory requirements, and economic conditions of other jurisdictions. In the future, we may also make additional international capital investments, including further acquisitions of companies outside the United States or companies having operations outside the United States. Risks inherent to international operations include, but are not limited to, the following:
•difficulty in enforcing agreements in some legal systems outside the United States;
•imposition of additional withholding taxes or other taxes on our foreign income, tariffs or other restrictions on foreign trade and investment, including currency exchange controls;
•fluctuations in exchange rates which may affect demand for our products and services and may adversely affect our profitability in U.S. dollars;
•inability to obtain, maintain or enforce intellectual property rights;
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•changes in general economic and political conditions in the countries in which we operate;
•unexpected adverse changes in the laws or regulatory requirements outside the United States, including those with respect to environmental protection, disclosure of social and environmental risks, opportunities, and impact, export duties and quotas;
•failure by our employees or agents to comply with U.S. laws affecting the activities of U.S. companies abroad;
•difficulty with staffing and managing widespread operations; and
•difficulty of and costs relating to compliance with the different commercial and legal requirements of the countries in which we operate.
Financial market conditions may adversely affect the benefit plan assets for our defined benefit plans, increase funding requirements and materially impact our statements of financial position and cash flows.
Our benefit plan assets are invested in a diversified portfolio of investments in both the equity and debt categories, as well as limited investments in other alternative investments. The current market values of all of these investments, as well as the related benefit plan liabilities are impacted by the movements and volatility in the financial markets. In accordance with the Compensation—Retirement Benefits topic of the Accounting Standards Codification ("ASC"), we have recognized the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability on our balance sheet, and will recognize changes in that funded status in the year in which the changes occur. The funded status is measured as the difference between the fair value of the plan's assets and the projected benefit obligation. A decrease in the fair value of these plan assets or a decrease in interest rates resulting from movements in the financial markets will increase the underfunded status of the plans recorded on our consolidated balance sheets and result in additional cash funding requirements to meet the minimum required funding levels.
Prolonged periods of inflation where we do not have adequate inflation protections in our customer contracts could have a material adverse effect on our results of operations.
A majority of our sales are conducted pursuant to medium- or long-term contracts that set fixed unit prices. Certain, but not all, of these contracts provide for price adjustments for index-based inflation or adjustments related to updated or final product cost for certain components. Ongoing inflationary pressures have caused and may continue to cause certain of our material and labor costs to increase, which can adversely affect our profitability and cash flows, particularly when we are unable to increase customer contract values or pricing to offset those pressures. Although we have attempted to minimize the effect of inflation on our business through contractual protections, our contracts that are medium- to long-term fixed price contracts increase our exposure to sustained or higher than anticipated increases in costs of labor or material. Prolonged global inflationary pressures have also impacted energy, freight, raw material, interest rates, labor, and other costs, and we may experience reduced levels of profitability as a result of ongoing inflationary pressures. 
Legal & Compliance Risks
Legal and compliance risk relates to risks arising from the government and regulatory environment and action and from legal proceedings and compliance with integrity policies and procedures, including those relating to financial reporting and environmental, health, and safety matters. Government and regulatory risk includes the risk that the government or regulatory actions will impose additional cost on us or require us to make adverse changes to our business models or practices.
Our international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect our operations.
We must comply with all applicable export control laws and regulations of the United States and other countries. United States laws and regulations applicable to us include the Arms Export Control Act, the International Traffic in Arms Regulations ("ITAR"), the Export Administration Regulations ("EAR"), and the trade sanctions laws and regulations administered by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC"). EAR restricts the export of dual-use products and technical data to certain countries, while ITAR restricts the export of defense products, technical data and defense services. The U.S. Government agencies responsible for administering EAR and ITAR have significant discretion in the interpretation and enforcement of these regulations. We cannot provide services to certain countries subject to United States trade sanctions unless we first obtain the necessary authorizations from OFAC. In addition, we are subject to the Foreign Corrupt Practices Act, which generally bars bribes or unreasonable gifts to foreign governments or officials.
Violations of these laws or regulations could result in significant additional sanctions, including fines, more onerous compliance requirements, more extensive debarments from export privileges, loss of authorizations needed to conduct aspects of our international business, and criminal penalties and may harm our ability to enter into contracts with the U.S. Government. A future 
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violation of ITAR or the other regulations enumerated above could materially adversely affect our business, financial condition and results of operations.
The construction of aircraft is heavily regulated, and failure to comply with applicable laws could reduce our sales or require us to incur additional costs to achieve compliance, and we may incur significant expenses to comply with new or more stringent governmental regulation.
The aerospace industry is highly regulated in the United States by the FAA and in other countries by similar agencies. We must be certified by the FAA and, in some cases, by individual OEMs in order to engineer and service parts, components and aerostructures used in specific aircraft models. If any of our material authorizations or approvals were revoked or suspended, our operations would be adversely affected. New or more stringent governmental regulations may be adopted, or industry oversight heightened in the future, and we may incur significant expenses to comply with any new regulations or any heightened industry oversight.
Any exposure to environmental liabilities may adversely affect us.
Our business, operations and facilities are subject to numerous stringent federal, state, local, and foreign environmental laws and regulations, and we are subject to potentially significant fines or penalties, including criminal sanctions, if we fail to comply with these requirements. In addition, we could be affected by future laws and regulations, including those imposed in response to climate change concerns and other actions commonly referred to as "green initiatives." Compliance with current and future environmental laws and regulations currently requires, and is expected to continue to require, significant operating and capital costs.
Pursuant to certain environmental laws, a current or previous owner or operator of a contaminated site may be held liable for the entire cost of investigation, removal or remediation of hazardous materials at such property. Innocent Landowner Regulations require an Environmental Site Assessment prior to acquisition to prevent unknowingly acquiring impaired property.  Once identified, if the transaction continues, the impairment is not covered by insurance. Although management believes that our operations and facilities are in material compliance with such laws and regulations, future changes in such laws, regulations, or interpretations thereof or the nature of our operations or regulatory enforcement actions, which may arise, may require us to make significant additional capital expenditures to ensure compliance in the future. Certain of our facilities, including facilities acquired and operated by us or one of our subsidiaries, have at one time or another been under active investigation for environmental contamination by federal or state agencies when acquired and, at least in some cases subject to remediation. Lawsuits, claims and costs involving sites undergoing remediation efforts and other environmental matters exist and may arise in the future. Individual facilities of ours have also been subject to investigation on occasion for possible past waste disposal practices which might have contributed to contamination at or from remote third-party waste disposal sites. In some instances, we are indemnified by prior owners or operators and/or present owners of the facilities for liabilities that we incur as a result of these investigations and the environmental contamination found that predates our acquisition of these facilities, subject to certain limitations, including, but not limited to, specified exclusions, deductibles and limitations on the survival period of the indemnity. We also maintain a pollution liability policy that provides coverage, subject to specified limitations, for specified material liabilities associated with the cleanup of certain on-site pollution conditions, as well as defense and indemnity for certain third-party suits (including Superfund liabilities at third-party sites), in each case, to the extent not otherwise indemnified. However, if we are required to pay the 
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expenses related to environmental liabilities because neither indemnification nor insurance coverage is available, these expenses could have a material adverse effect on our financial position, results of operations, and cash flows.
We could become involved in intellectual property litigation, which could have a material and adverse impact on our profitability.
We and other companies in our industry possess certain proprietary rights relating to designs, engineering, manufacturing processes, and repair and overhaul procedures. In the event that we believe that a third party is infringing upon our proprietary rights, we may bring an action to enforce such rights. In addition, third parties may claim infringement by us with respect to their proprietary rights and may initiate legal proceedings against us in the future. The expense and time of bringing an action to enforce such rights or defending against infringement claims can be significant. Intellectual property litigation involves complex legal and factual questions, which makes the outcome of any such proceedings subject to considerable uncertainty. Not only can such litigation divert management's attention, but it can also expose us to damages and potential injunctive relief, which, if granted, may preclude us from making, using, or selling particular products or technology. The expense and time associated with such litigation may have a material and adverse impact on our profitability.
Our reputation; our ability to do business; and our financial position, results of operations, and/or cash flows may be impacted by the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate.
We have implemented policies, procedures, training, and other compliance controls and have negotiated terms designed to prevent misconduct by employees, agents, or others working on our behalf or with us that would violate the applicable laws of the jurisdictions in which we operate, including laws governing improper payments to government officials, the protection of export controlled or classified information, cost accounting and billing, competition and data privacy. However, we cannot ensure that we will prevent all such misconduct committed by our employees, agents, subcontractors, suppliers, business partners, or others working on our behalf or with us, and this risk of improper conduct may increase as we expand globally. We may be unable to prevent misconduct or other violations of applicable laws by these joint ventures (including their officers, directors and employees) or our partners. Improper actions by those with whom or through whom we do business (including our employees, agents, subcontractors, suppliers, business partners and joint ventures) could subject us to administrative, civil or criminal investigations and monetary and non-monetary penalties, including suspension and debarment, which could negatively impact our reputation and ability to conduct business and could have a material adverse effect on our financial position, results of operations and/or cash flows.
The U.S. Government is a significant customer of our largest customers, and we and they are subject to specific U.S. Government contracting rules and regulations.
The military aircraft manufacturers' business, and by extension, our business, is affected by the U.S. Government's continued commitment to programs under contract with our customers. The terms of defense contracts with the U.S. Government generally permit the government to terminate contracts partially or completely, either for its convenience or if we default by failing to perform under the contract. Termination for convenience provisions provide only for our recovery of unrecovered costs incurred or committed, settlement expenses and profit on the work completed prior to termination. Termination for default provisions provide for the contractor to be liable for excess costs incurred by the U.S. Government in procuring undelivered items from another source. On contracts where the price is based on cost, the U.S. Government may review our costs and performance, as well as our accounting and general business practices. Based on the results of such audits, the U.S. Government may adjust our contract-related costs and fees, including allocated indirect costs. In addition, under U.S. Government purchasing regulations, some of our costs, including most financing costs, portions of research and development costs, and certain marketing expenses may not be subject to reimbursement.
We bear the potential risk that the U.S. Government may unilaterally suspend our customers or us from new contracts pending the resolution of alleged violations of procurement laws or regulations. Sales to the U.S. Government are also subject to changes in the government's procurement policies in advance of design completion. An unexpected termination of, or suspension from, a significant government contract, a reduction in expenditures by the U.S. Government for aircraft using our products, lower margins resulting from increasingly competitive procurement policies, a reduction in the volume of contracts awarded to us, or substantial cost overruns could have a material adverse effect on our financial condition, results of operations and cash flows.
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We are subject to the requirements of the National Industrial Security Program Operating Manual for facility security clearance, which is a prerequisite for our ability to perform on classified contracts for the U.S. Government.
U.S. DoD facility security clearance is required in order to be awarded and be able to perform on classified contracts for the U.S. DoD and certain other agencies of the U.S. Government, which is a significant part of our business. We have obtained clearance at appropriate levels that require stringent qualifications, and we may be required to seek higher level clearances in the future. We cannot assure you that we will be able to maintain our security clearance. If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform our present classified contracts or be able to enter into new classified contracts, which could affect our ability to compete for and capture new business.
Our business is subject to regulation in the United States and internationally.
The manufacturing of our products is subject to numerous federal, state and foreign governmental regulations. The number of laws and regulations that are being enacted or proposed by various governmental bodies and authorities is increasing. Compliance with these regulations is difficult and expensive. If we fail to adhere, or are alleged to have failed to adhere, to any applicable federal, state, or foreign laws or regulations, or if such laws or regulations negatively affect sales of our products, our business, prospects, results of operations, financial condition or cash flows may be adversely affected. In addition, our future results could be adversely affected by changes in applicable federal, state, and foreign laws and regulations, or the interpretation or enforcement thereof, including those relating to manufacturing processes, product liability, government contracts, trade rules and customs regulations, intellectual property, consumer laws, privacy laws, environmental protection, climate change, as well as accounting standards and taxation requirements (including tax-rate changes, new tax laws such as the proposed 15% global minimum tax under the Organisation for Economic Co-operation and Development (the “OECD”) Pillar Two, Global Anti-Base Erosion Rules (the “Pillar Two Rules”), or revised tax law interpretations).
 
Item 1B. Unresolved Staff Comments
None.
 
Item 1C. Cybersecurity
Risk management and strategy
Our cybersecurity program is designed to safeguard our information systems and protect confidentiality, integrity, and availability of those information systems and the information residing therein. Our cybersecurity risk management program is integrated with our broader enterprise risk management programs under the oversight of our Chief Administrative Officer ("CAO") and the Enterprise Risk Management Committee. The CAO reports to the CEO and is responsible for our overall information and data security strategy, cybersecurity risk policies and procedures, as well as evaluating and managing any material risks from cyber threats. Our Chief Information Security Officer ("CISO") reports directly to our CAO and leads our cybersecurity and compliance department.
The cybersecurity and compliance department, in conjunction with our Computer Security Incident Response Team ("CSIRT"), designs, implements, and executes continuous monitoring processes for our information systems. Our monitoring programs include the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. The CSIRT is responsible for the detection and assessment of cybersecurity threats and incidents in accordance with a formal risk assessment matrix established in cooperation with our Cybersecurity Disclosure Committee. This risk assessment matrix establishes a framework for notification of an incident to the Cybersecurity Disclosure Committee and, if appropriate, the Audit Committee or Board of Directors. The CISO also partners with internal functions such as finance, legal, and internal audit, as well as third-party consultants who perform risk-based assessments against the National Institute of Standards and Technology (“NIST”) 800-171 Rev2 and Cybersecurity Maturity Model Certification with recommendations, in designing, implementing, executing, monitoring, and improving our cybersecurity risk management program and strategy, helping ensure such programs and strategy align with our business and operational objectives.  Results of third-party assessments are shared with the Audit Committee or Board of Directors.
In the event of a cybersecurity incident, the CSIRT has an Incident Response Plan that outlines the steps that are designed to help ensure regulatory requirements are met and cyber vulnerabilities, if any, are addressed. We periodically conduct "tabletop" exercises to simulate cybersecurity incidents and help ensure that we are prepared to respond to such incidents in accordance with our internal policies and programs, as well as applicable laws and regulations.  In addition, tabletop exercises allow us to identify areas for potential improvement and maturation of our Incident Response Plan, or other aspects of our cybersecurity risk 
21

 
management program. These exercises have included participation by members of our Cybersecurity Disclosure Committee, including our CAO and Chief Financial Officer.
We have established a supply chain risk management program, which is a cross-functional program that forms part of our Enterprise Risk Management program and is supported by our security, compliance, and supply chain organizations. Through this evolving program, we assess the risks from cybersecurity threats that impact suppliers and third-party service providers with whom we share personal identifying and confidential information. We continue to assess and evolve our oversight processes to mature how we manage cybersecurity risks associated with the products and services we procure. We generally require our suppliers to adopt security practices based on industry-recognized standards. 
We have experienced, and may experience in the future, either directly or through our supply chain or other channels, cybersecurity incidents. To date, we are not aware of risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition. For additional information about risks associated with cybersecurity, refer to “Our business could be negatively affected by cyber or other security threats or other disruptions” in Item 1A. Risk Factors.
Governance
Our Board of Directors has overall responsibility for risk oversight and has delegated oversight of cybersecurity risks to the Audit Committee. The Audit Committee reports on its activities, findings, and other matters to the full Board of Directors quarterly, or more frequently as events or circumstances may require. The Audit Committee is charged with reviewing our cybersecurity processes for assessing key strategic, operational, and compliance risks. The CAO and CISO present an update to the Audit Committee on our cybersecurity risks and risk management strategies and processes at each regularly scheduled, quarterly meeting. These presentations include assessments on the threat landscape; emerging risks, threats, or vulnerabilities; updates on our risk management activities, including investments in risk mitigation and governance; compliance with laws and regulations; internal controls; and updates on incidents. 
At the management level, we have established two committees that are directly involved in managing and responding to cybersecurity risks and incidents: the Enterprise Risk Management Committee and the Cybersecurity Disclosure Committee. The Enterprise Risk Management Committee is responsible for assessing enterprise risk and overseeing our enterprise risk management programs, including the cybersecurity risk management programs described above. The Cybersecurity Disclosure Committee is a subcommittee of our Disclosure Committee and is responsible for assessing the materiality of identified cybersecurity incidents resulting from our monitoring programs described above and informing the Chair of the Audit Committee, the Audit Committee, or the Board of Directors, as appropriate. The CISO has responsibility for notifying the CAO and the Cybersecurity Disclosure Committee of potentially material cybersecurity incidents based on an established policy and risk assessment matrix that incorporates an evaluation of quantitative and qualitative factors such as potential impact on results of operations and financial condition, compliance with laws and regulations, and impact on key stakeholders such as employees and business partners. The CISO has over fifteen years of cybersecurity risk management experience and has served the Company for over twenty years in various roles involving managing information technology, security and compliance functions, including developing key enterprise capabilities such as security engineering and strategies on information security risk management. 
The CAO and Chief Financial Officer are members of both the Enterprise Risk Management Committee and the Cybersecurity Disclosure Committee and are supported by our information security, compliance, contracts, treasury, investor relations, operations, and supply chain organizations so that identified issues can be addressed in a timely manner and incidents are reported to the appropriate regulatory bodies as required. 
Item 2. Properties
As of March 31, 2024, we conducted business from office and operating facilities throughout the United States and select global markets, with our largest international facilities being located in the United Kingdom and Mexico. We also lease a facility in Radnor, Pennsylvania, for our corporate headquarters. 
We believe that our properties have been adequately maintained, are in good operating condition, and are suitable to support our operations for the foreseeable future. 
Item 3. Legal Proceedings
On December 12, 2023, a complaint was filed in the Supreme Court of the State of New York by Daher, the buyer of the Stuart facility, against TAS and the Company, alleging claims for breach of contract and fraudulent inducement of contract arising out of 
22

 
the sale of the Stuart facility.  The Complaint alleges that TAS failed to disclose known and widespread paint issues, as well as certain supplier and production issues at the facility, which rendered certain representations and warranties about the financial condition of the Stuart facility and the products manufactured by the Stuart facility false.  The Complaint seeks damages of approximately $130.0 million consisting of (a) approximately $60.0 million Daher agreed to pay Boeing for alleged non-conformities in products Daher manufactured and/or sold to Boeing after the closing; (b) approximately $30.0 million for future opportunities Daher claims to have lost; and (c) approximately $40 million for internal costs Daher claims to have incurred in fixing alleged non-conformities in products.  The divestiture agreement relating to the sale of the Stuart facility contains an $18.8 million general cap on breaches of representations (other than certain specified representations) and a $25.0 million cap on breaches of certain specified representations related to contracts and product warranties, in each case absent certain circumstances, including fraud or breaches of fundamental or tax representations.  Previously, on June 16, 2023, the Company entered into a settlement agreement with the buyer of the Stuart facility resolving a working capital dispute with the buyer resulting in an amount of $2.4 million payable to the Company and resolving claims by the buyer related to the accounts payable representation and warranty under the purchase agreement resulting in an amount of $9.2 million payable to the buyer, with such amount applicable to the general cap referred to above. The amounts were settled on a net basis by the Company paying $6.8 million to the buyer.
TAS and the Company dispute that they engaged in any fraudulent conduct, dispute that they breached the representations and warranties in the divestiture agreement, dispute the damages claimed (and that Daher could, in any event, recover any damages in excess of the liability caps set forth in the divestiture agreement) and intend to vigorously defend this matter. The amount of potential loss, if any, cannot be reasonably estimated at this time.
On May 7, 2024, a complaint was filed in the Court of Chancery of the State of Delaware by Qarbon, the buyer of the Red Oak facility, against TAS and the Company, alleging claims for breach of contract, fraudulent inducement of contract, and unjust enrichment arising out of the sale of the Red Oak facility.  The Complaint alleges that TAS failed to disclose potential future losses associated with the Boeing T-7A trainer program, which rendered certain representations and warranties about the financial condition of the Red Oak facility false.  The Complaint seeks partial rescission of the divestiture agreement as it relates to assignment of the T-7A contract and damages for past and future losses in an unspecified amount under the T-7A contract.
TAS and the Company dispute that they engaged in any fraudulent conduct, dispute that they breached the representations and warranties in the divestiture agreement (all of which expired more than two years ago under the terms of the divestiture agreement and with respect to which buyer had procured a representations and warranties insurance policy), dispute the damages claimed (and that Qarbon could, in any event, recover any damages in excess of the liability caps set forth in the divestiture agreement), dispute that unjust enrichment and partial rescission would be legally appropriate remedies, and intend to vigorously defend this matter. The amount of potential loss, if any, cannot be reasonably estimated at this time.
In the ordinary course of business, we are involved in other disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that are deemed to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief regarding unique contractual requirements, quality, costs, or impacts to production schedules. In addition, in connection with certain other divestitures made by the Company, we have received claims relating to closing working capital adjustments to purchase prices as well as claims regarding alleged violations of contractual terms, representations, and warranties of the sale agreements and demands for honoring guarantee or indemnification obligations.
While we cannot predict the outcome of any pending or future litigation, proceeding or claim and no assurances can be given, we intend to vigorously defend claims brought against the Company and do not believe that any other pending matters will have a material effect, individually or in the aggregate, on our financial position or results of operations.  If we are unable to successfully and equitably resolve such claims and assertions, our business, financial condition, and results of operations could be materially adversely affected. 
Item 4. Mine Safety Disclosures
Not applicable.
23

 
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the New York Stock Exchange under the symbol "TGI." As of May 10, 2024, there were approximately 120 holders of record of our common stock and we believe that our common stock was beneficially owned by approximately 18,443 persons.
Dividend Policy
During fiscal 2024 and 2023, we made no declaration or payments of dividends due to the March 2020 suspension of our dividend program. This suspension is still in place.  Our declaration and payment of cash dividends in the future and the amount thereof will depend upon our results of operations, financial condition, cash requirements, future prospects, limitations imposed by credit agreements or indentures governing debt securities and other factors deemed relevant by our Board of Directors. No assurance can be given that cash dividends will be declared and paid at historical levels or at all. Certain of our debt arrangements restrict our paying dividends and making distributions on our capital stock, except for the payment of stock dividends and redemptions of an employee's shares of capital stock upon termination of employment. We currently have an accumulated deficit which could limit or restrict our ability to pay dividends in the future.
Repurchases of Stock
In December 1998, we announced a program to repurchase up to 500,000 shares of our common stock. In February 2008, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to an additional 500,000 shares of its common stock. In February 2014, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to an additional 5,000,000 shares of its common stock. Though no purchases have been made in recent years, to the extent permitted by documentation governing our indebtedness, repurchases may be made from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program.  As of May 31, 2024, the Company remains able to purchase an additional 2,277,789 shares under such program. We currently have an accumulated deficit which, together with certain restrictive covenants imposed by credit agreements or indentures governing debt securities, could limit or restrict our ability to repurchase stock in the future.
 
 
24

 
Performance Graph
The following graph compares the cumulative 5-year total return provided stockholders on our common stock relative to the cumulative total returns of the Russell 1000 index, the Russell 2000 index and the S&P Aerospace & Defense index. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on March 31, 2019, and its relative performance is tracked through March 31, 2024.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*
Among Triumph Group, Inc., and The Russell 1000 and 2000 Indexes
And The S&P Aerospace & Defense Index
 
 
 
* $100 invested on March 31, 2019, in stock or index, including reinvestment of dividends.
 





























 
 
Fiscal year ended March 31,
 


 
 
2019
 
 
2020
 
 
2021
 
 
2022
 
 
2023
 
 
2024
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Triumph Group, Inc.
 
 
100.00
 
 
 
35.73
 
 
 
97.15
 
 
 
133.63
 
 
 
61.26
 
 
 
79.50
 


Russell 1000
 
 
100.00
 
 
 
91.97
 
 
 
147.70
 
 
 
167.30
 
 
 
153.26
 
 
 
199.03
 


Russell 2000
 
 
100.00
 
 
 
76.01
 
 
 
148.10
 
 
 
139.53
 
 
 
123.34
 
 
 
147.65
 


S&P Aerospace & Defense
 
 
100.00
 
 
 
73.62
 
 
 
102.91
 
 
 
117.68
 
 
 
122.55
 
 
 
135.51
 


 
 
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Item 6.  [Reserved]
Not Applicable.
25

 
Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere herein.
OVERVIEW
Business
We are a major supplier to the aerospace industry and have two reportable segments: (i) Systems & Support, whose companies’ revenues are derived from integrated solutions, including design, development, production and support of proprietary components, subsystems and systems, production of complex assemblies using external designs; and (ii) Interiors, whose companies' revenues are primarily derived from supplying commercial and regional manufacturers with thermo-acoustic insulation, composite components, ducting and primarily to customer designs and model-based definition.
Discontinued Operations
As disclosed in Note 3, in December 2023 we entered into a definitive agreement with AAR Corp. (“AAR”), to sell Product Support.  As a result of this agreement, beginning in the third quarter of fiscal 2024, we classified the Product Support results of operations for all periods presented as a discontinued operations and classified the assets and liabilities of the disposal group as held for sale.  As a result, these operations are no longer reported as part of the Systems & Support reportable segment. Unless specifically stated, all discussions regarding results for the years ended March 31, 2024, 2023, and 2022, reflect results from our continuing operations. The sale closed on March 1, 2024, and we recognized a gain of approximately $548.3 million. 
Income from discontinued operations in the year ended March 31, 2024, was approximately $546.9 million as compared with income from discontinued operations in the year ended March 31, 2023, of approximately $17.2 million.  This increase was primarily driven by the gain recognized upon the sale of Product Support as well as increased earnings on higher sales due to the continued recovery of the Commercial MRO market from the COVID-19 pandemic.  These increases were partially offset by transaction costs and applicable taxes directly related to the divestiture transaction. 
Under the terms of the purchase agreement, we will continue to guarantee the performance of certain of the divested legal entities pursuant to pre-existing performance guarantee agreements covering existing contracts with specific customers that are expected to be fully satisfied within the next twelve months.  There is no limitation to the maximum potential future liabilities under these guarantee agreements; however, we are fully indemnified by the buyer, AAR, against such losses that may arise from their failure to perform under the related contracts. The Company has also indemnified the buyer for a period of three years from the date of the transaction on product liability or warranty claims related to Product Support products and operations prior to the transaction date to the extent exceeding an aggregate amount of $1.0 million.  As of March 31, 2024, no indemnification assets or liabilities or guarantee liabilities have been recognized nor are any expected to be recognized at or subsequent to the closing of this divestiture. 
Summary of Significant Financial Results
Significant financial results for the fiscal year ended March 31, 2024, include:
•Net sales increased 5.4% to $1.19 billion.
•Operating income was $86.5 million.
•Loss from continuing operations was $34.5 million, or $(0.46) per diluted common share.
•Net income, including income from discontinued operations, was $512.4 million or $6.92 per diluted common share.
•Backlog of our continuing operations increased 22% over the prior year to $1.90 billion.  
•We generated $9.4 million of cash flows from operating activities.
 
Aviation Manufacturing Jobs Protection Program
In November 2021, we entered into an agreement with the Department of Transportation (“DOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”).   We received total proceeds under this program of $19.4 million, of which approximately $8.8 million was received in the three months ended June 30, 2022.  In July 2022, we received a letter from the DOT confirming that we had satisfied the reporting requirements under the AMJP.  In the years ended March 31, 2023 and 2022, we recognized approximately $4.7 million and $12.4 million, respectively, of the grant benefit as a reduction in cost of sales.
 
Warrants Distribution
As disclosed in Note 2, on December 19, 2022, we issued approximately 19.5 million Warrants to holders of record of common stock as of the Record Date. Each Warrant represented the right to purchase initially one share of common stock at an exercise price of $12.35 per Warrant.  Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or 
26

 
(ii) under certain circumstances, Designated Notes (as defined in Note 2). Approximately 8.1 million warrants were exercised since the date of the Warrants initial distribution on December 19, 2022, through July 6, 2023. In the year ended March 31, 2024, approximately 7.7 million warrants were exercised for total cash proceeds, net of transaction costs, of approximately $80.0 million.  On July 6, 2023, the Company redeemed all of the approximately 11.4 million outstanding Warrants for a total redemption price of less than $0.1 million.   In total, as a result of the Warrant exercises, from the date of issuance on December 19, 2022, through redemption on July 6, 2023, the Company increased its cash by approximately $84.1 million and reduced debt by approximately $14.4 million.
Significant Developments in Key Programs
Discussion of significant developments on key programs is included below. 
Boeing 737
The Boeing 737 program represented approximately 14% and 10% of net sales for the fiscal years ended March 31, 2024 and 2023, respectively, inclusive of both OEM production and aftermarket sales.  Of the total revenue recognized on the 737 program, OEM production revenue represented approximately 88% and 90% for the years ended March 31, 2024 and 2023, respectively.  In April 2024, Boeing publicly disclosed that it had slowed the 737 program production below 38 per month to incorporate improvements to its quality management system and expected production to increase in the second half of calendar year 2024 as rates return to 38 per month. 
No other programs are expected to represent more than 10% of our consolidated net sales.
In the years ended March 31, 2023, we completed the strategic divestiture of our manufacturing operations located in Stuart, Florida.  Refer to Note 3 for further discussion of these transactions. 
RESULTS OF OPERATIONS
The following includes a discussion of our consolidated and business segment results of operations for the year ended March 31, 2024, compared with the year ended March 31, 2023. Our diverse structure and customer base do not allow for precise comparisons between periods of the impact of price and volume changes to specific line items in our results of operations. However, we have disclosed the significant variances between the respective periods.  As a result of the classifying the Product Support results of operations for all periods presented as discontinued operations, we have also included an updated discussion of our consolidated and business segment results of operations for the year ended March 31, 2023, compared with the year ended March 31, 2022. 
Non-GAAP Financial Measures
We prepare and publicly release annual audited and quarterly unaudited financial statements prepared in accordance with U.S. GAAP. In accordance with Securities and Exchange Commission (the "SEC") rules, we also disclose and discuss certain non-GAAP financial measures in our public filings and earnings releases. Currently, the non-GAAP financial measures that we disclose are Adjusted EBITDA, which is our net (loss) income from continuing operations before interest and gains or losses on debt extinguishment, income taxes, amortization of acquired contract liabilities, costs incurred pertaining to shareholder cooperation agreements, consideration payable to customer related to divestitures, legal contingency losses (including legal judgments and settlements), gains/loss on divestitures, gains/losses on warrant remeasurements and warrant-related transaction costs, share-based compensation expense, depreciation and amortization (including impairment of long-lived assets), and the effects of certain pension charges such as curtailments, settlements, withdrawals, and other early retirement incentives; and Adjusted EBITDAP, which is Adjusted EBITDA, before pension expense or benefit (excluding pension charges already adjusted in Adjusted EBITDA). We disclose Adjusted EBITDA on a consolidated and Adjusted EBITDAP on a consolidated and a reportable segment basis in our earnings releases, investor conference calls and filings with the SEC. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations with our previously reported results of operations.
We view Adjusted EBITDA and Adjusted EBITDAP as operating performance measures and, as such, we believe that the U.S. GAAP financial measure most directly comparable to such measures is (loss) income from continuing operations. In calculating Adjusted EBITDA and Adjusted EBITDAP, we exclude from (loss) income from continuing operations the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our continuing business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. Adjusted EBITDA and Adjusted EBITDAP are not measurements of financial performance under U.S. GAAP and should not be considered as a measure of liquidity, as an alternative to (loss) income from continuing operations, or as an indicator of any other measure of performance derived in 
27

 
accordance with U.S. GAAP. Investors and potential investors in our securities should not rely on Adjusted EBITDA or Adjusted EBITDAP as a substitute for any U.S. GAAP financial measure, including (loss) income from continuing operations. In addition, we urge investors and potential investors in our securities to carefully review the reconciliation of Adjusted EBITDA and Adjusted EBITDAP to (loss) income from continuing operations set forth below, in our earnings releases, and in other filings with the SEC and to carefully review the U.S. GAAP financial information included as part of our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K that are filed with the SEC, as well as our quarterly earnings releases, and compare the U.S. GAAP financial information with our Adjusted EBITDA and Adjusted EBITDAP.
Adjusted EBITDA and Adjusted EBITDAP are used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our U.S. GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business. We have spent more than 20 years expanding our product and service capabilities, partially through acquisitions of complementary businesses. Due to the expansion of our operations, which included acquisitions, our net (loss) income from continuing operations has included significant charges for depreciation and amortization. Adjusted EBITDA and Adjusted EBITDAP exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for depreciation and amortization. We believe the disclosure of Adjusted EBITDA and Adjusted EBITDAP helps investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year. We also believe Adjusted EBITDA and Adjusted EBITDAP are measures of our ongoing operating performance because the isolation of noncash charges, such as depreciation and amortization, and nonoperating items, such as interest, income taxes, pension and other postretirement benefits, provides additional information about our cost structure and, over time, helps track our operating progress. In addition, investors, securities analysts, and others have regularly relied on Adjusted EBITDA and Adjusted EBITDAP to provide financial measures by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of the financial items that have been excluded from our (loss) income from continuing operations to calculate Adjusted EBITDA and Adjusted EBITDAP and the material limitations associated with using these non-GAAP financial measures as compared with (loss) income from continuing operations:
•Gains or losses from sale of assets and businesses may be useful for investors to consider because they reflect gains or losses from sale of operating units or other assets. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
•Warrants remeasurement gains or losses and warrant-related transaction costs may be useful for investors to consider because they reflect the mark-to-market changes in the fair value of our warrants and the costs associated with warrants issuance. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
•Consideration payable to a customer related to a divestiture may be useful for investors to consider because it reflects consideration paid to facilitate the ultimate sale of operating units. We do not believe these charges necessarily reflect the current and ongoing cash earnings related to our operations.
•Shareholder cooperation expenses may be useful for investors to consider because they represent certain costs that may be incurred periodically when reaching cooperative agreements with shareholders.  We do not believe these charges necessarily reflect the current and ongoing cash earnings related to our operations.
•Legal contingencies loss, when applicable, may be useful for investors to consider because it reflects gains or losses from legal disputes with third parties. We do not believe these gains or losses reflect the current and ongoing earnings related to our operations.
•Non-service defined benefit income or expense from our pension and other postretirement benefit plans (inclusive of certain pension related transactions such as curtailments, settlements, withdrawals, and early retirement or other incentives) may be useful for investors to consider because they represent the cost of postretirement benefits to plan participants, net of the assumption of returns on the plan's assets and are not indicative of the cash paid for such benefits. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
•Amortization of acquired contract liabilities may be useful for investors to consider because it represents the noncash earnings on the fair value of off-market contracts acquired through acquisitions. We do not believe these earnings necessarily reflect the current and ongoing cash earnings related to our operations.
•Amortization expense and nonrecurring asset impairments (including goodwill and intangible asset impairments) may be useful for investors to consider because it represents the estimated attrition of our acquired customer base and the diminishing value of trade names, product rights, licenses, or, in the case of goodwill, other assets that are not individually identified and separately recognized under U.S. GAAP. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•Depreciation may be useful for investors to consider because it generally represents the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
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•Share-based compensation may be useful for investors to consider because it represents a portion of the total compensation to management and the board of directors. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•The amount of interest expense and other, as well as debt modification and extinguishment gains or losses, we incur may be useful for investors to consider and may result in current cash inflows or outflows. However, we do not consider the amount of interest expense and other and debt extinguishment gains or losses to be a representative component of the day-to-day operating performance of our business.
•Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to gain an understanding of the factors and trends affecting our business.
 
The following table shows our Adjusted EBITDA and Adjusted EBITDAP reconciled to our (loss) income from continuing operations for the indicated periods (in thousands):
 

















 
 
Fiscal year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


(Loss) income from continuing operations (U.S. GAAP measure)
 
$
(34,467
)
 
$
72,417
 
 
$
(50,377
)


Income tax expense
 
 
7,123
 
 
 
3,360
 
 
 
4,526
 


Interest expense and other
 
 
123,021
 
 
 
115,211
 
 
 
113,080
 


Debt modification and extinguishment loss
 
 
1,694
 
 
 
33,044
 
 
 
11,624
 


Warrant remeasurement gain, net
 
 
(8,545
)
 
 
(8,683
)
 
 
—
 


Legal contingencies loss
 
 
7,338
 
 
 
—
 
 
 
—
 


Pension settlements, curtailments, withdrawals, and other pension related charges
 
 
—
 
 
 
—
 
 
 
52,005
 


Consideration payable to customer related to divestiture
 
 
—
 
 
 
17,185
 
 
 
—
 


Shareholder cooperation expenses
 
 
1,905
 
 
 
—
 
 
 
—
 


Loss (gain) on sale of assets and businesses, net
 
 
12,208
 
 
 
(101,523
)
 
 
9,294
 


Share-based compensation
 
 
9,445
 
 
 
8,913
 
 
 
9,782
 


Amortization of acquired contract liabilities
 
 
(2,721
)
 
 
(2,500
)
 
 
(5,871
)


Depreciation and amortization*
 
 
29,625
 
 
 
32,259
 
 
 
47,817
 


Adjusted EBITDA (non-GAAP measure)
 
 
146,626
 
 
 
169,683
 
 
 
191,880
 


Non-service defined benefit loss (income) (excluding pension related charges)
 
 
(2,372
)
 
 
(19,664
)
 
 
(57,378
)


Adjusted EBITDAP (non-GAAP measure)
 
$
144,254
 
 
$
150,019
 
 
$
134,502
 


 
* Includes impairment charges related to intangible and other long-lived assets
 
Fiscal year ended March 31, 2024, compared with fiscal year ended March 31, 2023
 













 
 
Fiscal Year Ended March 31,
 


(In thousands)
 
2024
 
 
2023
 


Commercial OEM
 
$
530,263
 
 
$
541,481
 


Military OEM
 
 
261,918
 
 
 
261,051
 


Total OEM Revenue
 
 
792,181
 
 
 
802,532
 


 
 
 
 
 
 
 


Commercial Aftermarket
 
 
164,014
 
 
 
126,148
 


Military Aftermarket
 
 
183,108
 
 
 
165,814
 


Total Aftermarket Revenue
 
 
347,122
 
 
 
291,962
 


 
 
 
 
 
 
 


Non-Aviation Revenue
 
 
50,019
 
 
 
33,568
 


Amortization of acquired contract liabilities
 
 
2,721
 
 
 
2,500
 


Total Net Sales
 
$
1,192,043
 
 
$
1,130,562
 


 
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Net Sales
Commercial OEM sales decreased $11.2 million, or 2.1% due to divestitures and exited or sunsetting programs, which represented approximately $74.0 million in net changes. Excluding impacts from divestitures and exited or sunsetting programs, Commercial OEM sales increased $62.8 million, or 13.5% due to increased production volumes on Boeing 737, 777, and 787 programs, partially offset by lower sales volume on commercial rotorcraft and a decrease in revenue from a prior year commercial OEM nonrecurring intellectual property transaction of approximately $16.3 million.
Military OEM sales increased $0.9 million, or 0.3%, primarily due to increased sales related to the CH-53K and F35 platforms partially offset by decreased sales on the V-22 and CH-47 military rotorcraft platforms.
Commercial Aftermarket sales increased $37.9 million, or 30.0%.  Excluding impacts from divestitures, Commercial Aftermarket sales increased $39.9 million, or 32.3%, driven by the continued improvement in overall air travel metrics, favorably impacting both repair and overhaul services and spare part sales.  Commercial Aftermarket also benefited from a spare parts intellectual property transaction of approximately $4.2 million in the current year. 
Military aftermarket sales increased $17.3 million, or 10.4%, driven by increased sales across several rotorcraft and fixed wing platforms including V-22, CH-47, and AH-64 partially offset by decreased sales on the UH-60 and C-5 programs.
Non-aviation sales increased approximately $16.5 million, or 49.0%, primarily driven by increased sales of non-aircraft military components. 
 













 
 
Year Ended March 31,
 


 
 
2024
 
 
2023
 


 
 
(in thousands)
 


Operating income
 
$
86,454
 
 
$
195,685
 


Non-service defined benefit income
 
 
(2,372
)
 
 
(19,664
)


Debt modification and extinguishment loss
 
 
1,694
 
 
 
33,044
 


Warrant remeasurement gain, net
 
 
(8,545
)
 
 
(8,683
)


Interest expense and other
 
 
123,021
 
 
 
115,211
 


Income tax expense
 
 
7,123
 
 
 
3,360
 


(Loss) income from continuing operations
 
$
(34,467
)
 
$
72,417
 


Operating Income
Consolidated gross profit margin decreased to 27.1% for the year ended March 31, 2024, from 28.4% for the year ended March 31, 2023  This decrease was primarily due to inflationary increases in labor and material costs, including unfavorable foreign exchange effects from a strong Mexican peso; the net decrease in margin benefit of nonrecurring intellectual property transactions; the prior year AMJP grant benefits disclosed above; and certain favorable adjustments associated with sunsetting programs, partially offset by the increased mix in Aftermarket sales as a percentage of total sales.  Excluding impacts from divestitures and exited or sunsetting programs, gross margin for the year ended March 31, 2024, was 27.2% compared with 28.5% for the year ended March 31, 2023. 
Operating income decreased approximately $109.2 million, or 55.8%.  Excluding impacts from divestitures, significant exited or sunsetting programs, and the decrease in gain recognized on sale of assets of business of $113.7 million, operating income increased approximately $20.7 million.  This increase was primarily driven by the changes in sales and margins described above and decreased general and administrative human capital costs of approximately $8.1 million, partially offset by approximately $7.3 million in legal judgment loss recognized in the year ended March 31, 2024 (refer to Note 17 for further disclosure).
Debt Modification and Extinguishment 
Debt modification and extinguishment losses decreased in the current year as a result of approximately $31.6 million in prior period losses recognized in the year ended March 31, 2023, upon the March 2023 issuance of $1.20 billion aggregate principal amount of the 2028 First Lien Notes and redemption of $1.07 billion of the then outstanding 8.875% Senior Secured First Lien Notes due 2024 (the “2024 First Lien Notes”) and 6.250% Senior Secured Notes due 2024 (the “2024 Second Lien Notes”).
Warrant Remeasurement Gain
Warrant remeasurement gain, which represents mark-to-market changes in the fair value of our warrants, were consistent with the prior year period.  As disclosed in above, we redeemed all of the approximately 11.4 million outstanding Warrants on July 6, 2023, for a total redemption price of less than $0.1 million. 
Interest Expense and Other
Interest expense and other increased due to higher interest rates compared to the prior year.
30

 
Non-service Defined Benefit Income
Non-service defined benefit income decreased by $17.3 million, primarily due to changes in actuarial assumptions and experience that decreased income for the year ended March 31, 2024, by $30.8 million, partially offset by the approximately $14.6 million of pension cost recognized in the prior year as a result of our withdrawal from a multiemployer pension plan.
Income Taxes
The income tax expense was $7.1 million for the fiscal year ended March 31, 2024, reflecting an effective tax rate of (26.0)%.  During the fiscal year ended March 31, 2024, we adjusted the valuation allowance against the consolidated net deferred tax asset by $113.4 million primarily due to utilization of net operating loss carryforward, deduction of previously disallowed interest expense deductions, utilization of research and development credits previously carried forward, research and development cost amortization, and pension and other postretirement benefit plans. As of March 31, 2024, management determined that it was necessary to maintain a valuation allowance against principally all of our net deferred tax assets.
Business Segment Performance
We report our financial performance based on the following two reportable segments: Systems & Support and Interiors. Our Chief Operating Decision Maker ("CODM") utilizes Adjusted EBITDAP as a primary measure of profitability to evaluate the performance of our segments and allocate resources.
The results of operations among our reportable segments vary due to differences in competitors, customers, extent of proprietary deliverables and performance. For example, Systems & Support, which generally includes proprietary products and/or arrangements where we become the primary source or one of a few primary sources to our customers, our unique manufacturing capabilities command a higher margin. 
Refer to Item 1 for further details regarding the operations and capabilities of each of our reportable segments. 
We currently generate a majority of our revenue from sales to OEMs and aftermarket MRO services in the commercial airline and military and defense markets.  Our growth and financial results are largely dependent on continued demand for our products and services within these markets. If any of the related industries experiences a downturn, our clients in these sectors may conduct less business with us. The loss of one or more of our major customers or an economic downturn in the commercial airline or the military and defense markets could have a material adverse effect on our business. 
 
Business Segment Performance—Fiscal year ended March 31, 2024, compared with fiscal year ended March 31, 2023
 

























 
 
Year Ended March 31,
 
 
% Change
 
 
% of Total Sales
 


 
 
2024
 
 
2023
 
 
 
 
 
2024
 
 
2023
 


 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 


Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Systems & Support
 
$
1,028,425
 
 
$
919,351
 
 
 
11.9
%
 
 
86.3
%
 
 
81.3
%


Interiors
 
 
164,440
 
 
 
211,647
 
 
 
(22.3
)%
 
 
13.8
%
 
 
18.7
%


Elimination of inter-segment sales
 
 
(822
)
 
 
(436
)
 
 
(88.5
)%
 
 
(0.1
)%
 
(0.0)%
 


Total net sales
 
$
1,192,043
 
 
$
1,130,562
 
 
 
5.4
%
 
 
100.0
%
 
 
100.0
%


Systems & Support:
Net sales increased $109.1 million, or 11.9%, and included growth across all end markets. Net sales increased primarily as a result of the continued market recovery driving volumes for both commercial OEM and aftermarket sales as well as the CH-53K and F35 platforms, partially offset by decreased sales on the V-22 and CH-47 military rotorcraft platforms, other commercial rotorcraft, and a decrease in revenue from nonrecurring intellectual property transactions of approximately $12.1 million.
Interiors
Excluding the sales decreases from divestitures and significant exited or sunsetting programs of $76.0 million, net sales increased by $28.8 million, or 22%, primarily due to increased OEM volume on the 737, 777, and 787 programs. 
 

























 
 
Year Ended March 31,
 
 
% Change
 
 
% of Segment Sales
 


 
 
2024
 
 
2023
 
 
 
 
 
2024
 
 
2023
 


 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 


Adjusted EBITDAP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Systems & Support
 
$
200,074
 
 
$
172,415
 
 
 
16.0
%
 
 
19.5
%
 
 
18.8
%


Interiors
 
 
(5,000
)
 
 
31,937
 
 
 
(115.7
)%
 
 
(3.0
)%
 
 
14.0
%


Total Segment Adjusted EBITDAP
 
 
195,074
 
 
 
204,352
 
 
 
(4.5
)%
 
 
16.4
%
 
 
17.8
%


Less:  Unallocated Corporate EBITDAP
 
 
(50,820
)
 
 
(54,333
)
 
 
6.5
%
 
n/a
 
 
n/a
 


Total Consolidated Adjusted EBITDAP
 
$
144,254
 
 
$
150,019
 
 
 
(3.8
)%
 
 
12.1
%
 
 
13.1
%


 
31

 
Systems & Support
Adjusted EBITDAP increased by $27.7 million, or 16.0%, primarily due to the gross profit on increased sales described above as well as a $3.5 million reduction in general and administrative human capital costs, partially offset by the net decrease in margin benefit of nonrecurring intellectual property transactions, and the prior period AMJP grant benefit of $4.7 million. 
Adjusted EBITDAP as a percentage of segment sales increased as a result of the factors described above.  Additionally, increases in Aftermarket sales as a percentage of total sales and overall volume efficiencies offset the impact on margin of rising material costs. 
Interiors
Excluding Adjusted EBITDAP decreases from divestitures and significant exited or sunsetting programs of $34.1 million, Adjusted EBITDAP decreased by $2.8 million primarily due to the inflationary increases in labor and material costs, including unfavorable foreign exchange effects from a strong Mexican peso, partially offset by the increased volumes disclosed above.  Excluding impacts from divestitures and significant exited or sunsetting programs, Adjusted EBITDAP as a percentage of segment sales decreased as a result of these factors to (1.3)% as compared with 0.6% in the prior year. 
Unallocated Corporate EBITDAP 
Corporate expenses consist primarily of compensation, benefits, professional services and other administrative costs incurred by the corporate offices and decreased approximately $3.5 million or 6.5%, primarily due to reduced general and administrative human capital costs.
Fiscal year ended March 31, 2023, compared with fiscal year ended March 31, 2022













 
 
Fiscal Year Ended March 31,
 


(In thousands)
 
2023
 
 
2022
 


Commercial OEM
 
$
541,481
 
 
$
645,118
 


Military OEM
 
 
261,051
 
 
 
292,376
 


Total OEM Revenue
 
 
802,532
 
 
 
937,494
 


 
 
 
 
 
 
 


Commercial Aftermarket
 
 
126,148
 
 
 
103,453
 


Military Aftermarket
 
 
165,814
 
 
 
177,125
 


Total Aftermarket Revenue
 
 
291,962
 
 
 
280,578
 


 
 
 
 
 
 
 


Non-Aviation Revenue
 
 
33,568
 
 
 
38,761
 


Amortization of acquired contract liabilities
 
 
2,500
 
 
 
5,871
 


Total Net Sales
 
$
1,130,562
 
 
$
1,262,704
 


Net Sales
Commercial OEM sales decreased $103.6 million, or 16.1% due to divestitures and exited or sunsetting programs, which represented approximately $206.9 million in net changes. Excluding impacts from divestitures and significant exited or sunsetting programs, Commercial OEM sales increased $103.2 million, or 28.4% with over half the improvement driven by increased production volumes on the Boeing 737 program, as well as on increases across other commercial fixed wing and rotorcraft programs and an increase in revenue from nonrecurring intellectual property transactions of approximately $12.3 million.
Military OEM sales decreased $31.3 million, or 10.7% primarily due to divestitures, as well as lower sales related to the E2-D and AH-64 programs, partially offset by increased sales related to the CH-53K and CH-47 programs.
Commercial Aftermarket sales increased  $22.7 million, or 21.9%.  Excluding impacts from divestitures, Commercial Aftermarket sales increased $29.0 million, or 30.7%, driven by the continued pandemic recovery, including improvement in overall air travel metrics, with the primary increase on 737 volumes. 
Military aftermarket sales decreased  $11.3 million, or 4.1% driven by reduced repairs and spares across several rotorcraft platforms relative to the prior year. 
 
32

 













 
 
Year Ended March 31,
 


 
 
2023
 
 
2022
 


 
 
(in thousands)
 


Operating income
 
$
195,685
 
 
$
73,480
 


Non-service defined benefit expense
 
 
(19,664
)
 
 
(5,373
)


Debt modification and extinguishment loss
 
 
33,044
 
 
 
11,624
 


Warrant remeasurement gain, net
 
 
(8,683
)
 
 
—
 


Interest expense and other
 
 
115,211
 
 
 
113,080
 


Income tax
 
 
3,360
 
 
 
4,526
 


Income (loss) from continuing operations
 
$
72,417
 
 
$
(50,377
)


Operating Income
Consolidated gross profit margin increased to 28.4% for the year ended March 31, 2023, from 26.5% for the year ended March 31, 2022  Excluding impacts from divestitures and significant exited or sunsetting programs, gross margin for the year ended March 31, 2023, was 28.4% compared with 32.5% for the year ended March 31, 2022.  This decrease was primarily the result of approximately $24.9 million in reductions in acquired contract reserves recognized in the year ended March 31, 2022, and a net decrease in AMJP benefits of approximately $7.7 million, as well as an increased mix in OEM sales as a percentage of total sales.  These decreases were partially offset by the net margin benefit on nonrecurring intellectual property transactions described above of $12.3 million and increased volumes and related efficiencies. 
Operating income increased approximately $122.2 million, or 166.3%.  Excluding impacts from divestitures, significant exited or sunsetting programs, and the increase in gain recognized on sale of assets of business of $110.8 million, operating income increased approximately $31.5 million. This increase was primarily driven by the changes in sales and margins described above and decreased general and administrative human capital costs of approximately $6.8 million and $4.1 million in decreased depreciation and amortization, partially offset by approximately $7.2 million in increased legal and consulting expense.
Debt Modification and Extinguishment
We recognized debt extinguishment losses of $33.0 million for fiscal year ended March 31, 2023, compared with $11.6 million for fiscal year ended March 31, 2022.  In March 2023, we issued $1.20 billion aggregate principal amount of the 2028 First Lien Notes and redeemed the 2024 First Lien Notes ($543.8 million aggregate principal amount) and the 2024 Second Lien Notes ($525.0 million aggregate principal amount) resulting in prepayment premiums and write off of prior deferred financing cost of $31.6 million in the aggregate. The remaining debt extinguishment losses in fiscal 2023 and fiscal 2022 were related to mandatory redemptions under our 2024 First Lien Notes related to proceeds from prior asset sales.
Warrant Remeasurement Gain
Warrant remeasurement gain, which represents mark-to-market changes in the fair value of our warrants, were the result of decreases in fair value from the date of issuance on December 19, 2022, through March 31, 2023.
Interest Expense and Other
Interest expense and other increased due to unfavorable changes in foreign currency exchange rates of approximately $6.6 million offset by lower interest on lower relative debt balances compared to the prior year period. 
Non-service Defined Benefit Income
Non-service defined benefit income increased by $14.3 million, to $19.7 million for the fiscal year ended March 31, 2023, compared with $5.4 million for the fiscal year ended March 31, 2022.  The increase was primarily due to the recognition of curtailment and settlement losses of approximately $52.0 million in the aggregate upon the completion of the composites and large structure manufacturing divestitures, the settlement of a legacy fully-funded pension obligation, and the settlement of pension obligations of certain retired participants in our qualified U.S. pension plan all in the fiscal year ended March 31, 2022, partially offset by approximately $14.6 million of pension cost recognized in the fiscal year ended March 31, 2023, as a result of our withdrawal from a multiemployer pension plan. 
Income Taxes
The income tax expense was $3.4 million for the fiscal year ended March 31, 2023, reflecting an effective tax rate of 4.4%.  During the fiscal year ended March 31, 2023, we adjusted the valuation allowance against the consolidated net deferred tax asset by $0.2 million primarily due to a utilization of net operating loss carryforward, utilization of capital loss carryforward, and changes to temporary differences related to interest disallowance, amortization of research and development costs, and pension and other postretirement benefit plans. As of March 31, 2023, management determined that it was necessary to maintain a valuation allowance against principally all of our net deferred tax assets.
33

 
Business Segment Performance—Fiscal year ended March 31, 2023, compared with fiscal year ended March 31, 2022

























 
 
Year Ended March 31,
 
 
% Change
 
 
% of Total Sales
 


 
 
2023
 
 
2022
 
 
 
 
 
2023
 
 
2022
 


 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 


Net sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Systems & Support
 
$
919,351
 
 
$
833,630
 
 
 
10.3
%
 
 
81.3
%
 
 
66.0
%


Interiors
 
 
211,647
 
 
 
429,547
 
 
 
(50.7
)%
 
 
18.7
%
 
 
34.0
%


Elimination of inter-segment sales
 
 
(436
)
 
 
(473
)
 
 
7.8
%
 
(0.0)%
 
 
(0.0)%
 


Total net sales
 
$
1,130,562
 
 
$
1,262,704
 
 
 
(10.5
)%
 
 
100.0
%
 
 
100.0
%


Systems & Support:
Net sales increased $85.7 million, or 10.3%, primarily as a result of the continued recovery from the pandemic driving volume for both commercial OEM and aftermarket sales, as noted above, and an increase in revenue from nonrecurring intellectual property transactions of approximately $12.3 million.  The prior year period included $11.7 million in sales from our since divested operations in Staverton, United Kingdom.
Interiors
Excluding impacts from divestitures and exited or sunsetting programs, which resulted in $226.2 million in decreased sales, net sales increased by $8.3 million, or 6.7%, primarily due to increased commercial OEM volume on the 737 program, partially offset by decreased volume on certain commercial widebody programs. 
 

























 
 
Year Ended March 31,
 
 
% Change
 
 
% of Segment Sales
 


 
 
2023
 
 
2022
 
 
 
 
 
2023
 
 
2022
 


 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 


Adjusted EBITDAP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Systems & Support
 
$
172,415
 
 
$
155,132
 
 
 
11.1
%
 
 
18.8
%
 
 
18.7
%


Interiors
 
 
31,937
 
 
 
30,204
 
 
 
5.7
%
 
 
14.0
%
 
 
7.0
%


Total Segment Adjusted EBITDAP
 
 
204,352
 
 
 
185,336
 
 
 
10.3
%
 
 
17.8
%
 
 
14.8
%


Less:  Unallocated Corporate EBITDAP
 
 
(54,333
)
 
 
(50,834
)
 
 
(6.9
)%
 
n/a
 
 
n/a
 


Total Consolidated Adjusted EBITDAP
 
$
150,019
 
 
$
134,502
 
 
 
11.5
%
 
 
13.1
%
 
 
10.7
%


Systems & Support
Adjusted EBITDAP increased by $17.3 million, or 11.1%, primarily due to gross profit on increased sales described above as well as the net margin benefit on nonrecurring intellectual property transactions described above of $12.3 million and approximately $4.0 million in decreased administrative human capital related costs, partially offset by decreased AMJP grant benefits of $7.7 million, and the approximately $24.9 million in reductions in acquired contract reserves recognized in the prior year period.  As a result of these factors, Adjusted EBITDAP as a percentage of segment sales was consistent with the prior year period. 
Interiors
Excluding impacts from divestitures and exited or sunsetting programs, Adjusted EBITDAP increased by $13.5 million.  This improvement was partially offset by declines from the divestitures and sunsetting programs of $11.8 million. Excluding the impacts from divestitures and exited or sunsetting programs, Adjusted EBITDAP as a percentage of segment sales for the year ended March 31, 2023, was 0.6% compared with (10.1)% for the year ended March 31, 2022, primarily driven by increased commercial OEM production volumes and related overhead absorption benefits. 
Unallocated Corporate EBITDAP 
Corporate expenses consist primarily of compensation, benefits, professional services and other administrative costs incurred by the corporate offices and increased approximately $3.5 million or 6.9%, primarily due to increased legal and consulting expenses. 
Liquidity and Capital Resources
Discontinued Operations
The accompanying consolidated statements of cash flows do not present the cash flows from discontinued operations separately from cash flow from continuing operations.  Capital expenditures and other operating and investing noncash items of the discontinued operations for the years ended March 31, 2024, 2023, and 2022, were immaterial. 
As disclosed above, using the proceeds from the Product Support divestiture, on March 4, 2024, we completed the redemption of $120.0 million of our 2028 First Lien Notes (as defined in Note 10) for approximately $128.7 million, reflecting a redemption price of 103% of the aggregate principal amount plus accrued and unpaid interest.  On March 5, 2024, pursuant to an offer made in accordance with the provisions of the indenture governing the 2028 First Lien Notes to purchase 2028 First Lien Notes for cash, 
34

 
we settled the asset sale tender offer of approximately $1.1 million of our 2028 First Lien Notes for $1.2 million, reflecting a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest.  On March 6, 2024, we redeemed the remaining outstanding $435.6 million of 2025 Notes (as defined in Note 10) for approximately $437.6 million, reflecting a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest.  As a result of these redemptions, we reduced our long-term debt by approximately $556.7 million.  These actions will result in reduced interest expense of approximately $44.7 million in fiscal 2025. 
The following discussion of our liquidity and capital resources includes cash flows from discontinued operations.
Operating Cash flows
Our working capital needs are generally funded through our current cash and cash equivalents, cash flows from operations, and proceeds from the Securitization Facility. For the fiscal year ended March 31, 2024, we generated cash of $9.4 million from operating activities, compared with a net cash outflow of $52.3 million for the fiscal year ended March 31, 2023, an improvement of $61.7 million. Cash flows were primarily driven by timing of receivables and payables, including an increase of approximately $20.4 million in customer advances as of March 31, 2024, as compared with March 31, 2023.  In both fiscal 2024 and 2023, operating cash outflows were used to support inventory increases in response to anticipated increasing demand.   Interest payments were approximately $148.0 million for the twelve months ended March 31, 2024, as compared with approximately $138.5 million for the twelve months ended March 31, 2023, with the increase principally driven by higher interest rates on outstanding debt.  Additionally, operating cash outflows included approximately $12.5 million in Product Support divestiture transactions costs, and we paid approximately $11.8 million in income taxes in fiscal 2024 as compared with approximately $4.6 million in fiscal 2023, such increase primarily being the result of income taxes paid in connection with the taxable income generated upon the divestiture of Product Support. 
In November 2021, the Company entered into an agreement with the DOT under the AMJP. We received total proceeds under this program of $19.4 million, of which approximately $8.8 million was received in the year ended March 31, 2023. These cash receipts are classified within cash from operations. 
Investing Cash Flows
Cash flows used in investing activities for the fiscal year ended March 31, 2024, increased $717.1 million from the cash flows provided by investing activities for the fiscal year ended March 31, 2023. Cash flows used in investing activities for the fiscal year ended March 31, 2024, included net proceeds from the sale of assets and businesses, including working capital settlements, of $713.4 million, principally from approximately $720.3 million of proceeds from the sale of Product Support, partially offset by payments related to sale of assets and businesses of approximately $6.8 million as a result of the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement and the finalization of certain purchase price adjustments related to the transferred working capital of the divested operations, as described in Note 3 and Note 17.  We also used approximately $21.8 million for capital expenditures.  Cash flows used in investing activities for the fiscal year ended March 31, 2023, included payments on the sale of assets and businesses of approximately $6.2 million with additional investing outflows from capital expenditures of $20.7 million.  We currently expect capital expenditures in fiscal 2025 to be in the range of $20.0 - $25.0 million.  The majority of our planned fiscal 2025 capital expenditures are capital investments designed to improve our manufacturing efficiency and expand our capabilities.
Financing Cash Flows
Cash flows used in financing activities for the fiscal year ended March 31, 2024, were $534.3 million, compared with cash flows provided by financing activities for the fiscal year ended March 31, 2023, of $65.8 million. In the year ended March 31, 2024, the following significant financing cash flow events occurred:
•We generated approximately $80.0 million in proceeds, net of related transaction costs, from approximately 6.8 million in Warrant exercises in the first half of fiscal 2024, which resulted in the issuance of approximately 6.8 million shares.
•We used cash to redeem approximately $483.7 million in principal amount of 2025 Notes, including approximately $48.1 million of which was used to redeem $50.0 million in principal amount under the 10b5-1 repurchase plan agreement disclosed in Note 10.  
•We redeemed or repurchased approximately $121.1 million of the 2028 First Lien Notes and paid a premium upon redemption of $3.6 million.
The remainder of financing cash flows pertains primarily to payments of financing costs incurred in conjunction with our March 2023 refinancing, borrowings and payments under finance leases, and the repurchase of common stock to satisfy employee tax withholding obligations resulting from equity compensation.  As of March 31, 2024, we had $392.5 million  of cash on hand and approximately $44.1 million was available under the Securitization Facility after giving effect to approximately $19.6 million in outstanding letters of credit, all of which were accruing interest at 0.125% per annum. 
On May 30, 2024, we redeemed $120.0 million of our 2028 First Lien Notes at a redemption price equal to 103.000% of the principal amount redeemed plus accrued and unpaid interest to, but not including, the redemption date. 
Refer to Note 12 for disclosures related to certain indemnifications, consent-to-assignment agreements, and guarantee agreements associated with our divestiture activities.
35

 
In December 2021, The Organization for Economic Cooperation and Development adopted rules for a global minimum tax framework to serve as a model to member nations (“BEPS Pillar Two”). In response, various governments have enacted, are in the process of enacting, or are considering legislation adopt this global minimum tax. We have preliminarily assessed the impact of Pillar Two on our operations and currently do not expect that it will result in substantial tax costs to us. As legislation is not final in many jurisdictions and is subject to change, it is possible that later developments will present a greater cost than those currently expected.
We currently expect fiscal 2025 operations to result in net cash inflows, however, due to cyclicality we anticipate using cash over the first half of fiscal 2025 and generating in the second half.  We believe, based on an assessment of our current cash holdings as presented on the accompanying consolidated balance sheet as of March 31, 2024, as well as current market conditions, that cash flows from operations and borrowings under the Securitization Facility will be sufficient to meet anticipated cash requirements for our current operations for at least the next 12 months.  We also believe, based on our current cash, our fiscal 2025 operating cash flow expectations, and the expected expansion of cash flows from operations subsequent to fiscal 2025, that we have the ability to generate and obtain adequate amounts of cash to meet anticipated cash requirements for the foreseeable future.  We continually evaluate opportunities to access the credit and capital markets.  We may also seek transactions to extend the maturity of our indebtedness, reduce leverage, or decrease interest expense. Such transactions could include one or more repurchases or exchanges of our outstanding indebtedness. These transactions could increase our total amount of secured indebtedness or be dilutive to stockholders. There can be no assurances if or when we will consummate any such transactions or the timing thereof.
The 2028 First Lien Notes are our senior obligations and rank equally in right of payment with all of our other future senior indebtedness and senior in right of payment to all of our existing and future subordinated indebtedness. 
The 2028 First Lien Notes are (a) effectively senior to all existing and future second lien obligations and all existing and future unsecured indebtedness of the Company and the Guarantor Subsidiaries, but only to the extent of the value of the Collateral (as defined below), and after giving effect to any permitted additional first lien secured obligations and other permitted liens of senior or equal priority; (b) secured by the Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to a Collateral Trust Agreement (as defined below); (c) effectively subordinated to any existing and future obligations of the Company and the Guarantor Subsidiaries that are secured by assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and (d) structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee the 2028 First Lien Notes, including the Securitization Facility.
The 2028 First Lien Notes are guaranteed on a full, senior, joint and several basis certain of the Company’s domestic restricted subsidiaries (the “Guarantor Subsidiaries”). Currently, our only consolidated subsidiaries that are not guarantors of the 2028 First Lien Notes (the "Non-Guarantor Subsidiaries") are: (i) the receivables securitization special purpose entity, and (ii) charitable foundation entity.  The 2028 First Lien Notes and the related guarantees are secured by first-priority liens on substantially all of our assets and our subsidiary guarantors, whether now owned or hereafter acquired (the “Collateral”). 
Pursuant to the documentation governing the 2028 First Lien Notes, we may redeem some or all of the 2028 First Lien Notes prior to their stated maturities, subject to certain limitations set forth in the indenture governing the 2028 First Lien Notes and, in certain cases, subject to significant prepayment premiums. We are obligated to offer to repurchase the 2028 First Lien Notes at specified prices as a result of certain change-of-control events and a sale of all or substantially all of our assets. These restrictions and prohibitions are subject to certain qualifications and exceptions.
The indenture governing the 2028 First Lien Notes, as well as Securitization Facility, contain covenants and restrictions that, among other things, limit our ability and the ability of any of the Guarantor Subsidiaries to (i) grant liens on our assets; (ii) make dividend payments, other distributions or other restricted payments; (iii) incur restrictions on the ability of the Guarantor Subsidiaries to pay dividends or make other payments or investments; (iv) enter into sale and leaseback transactions; (v) merge, consolidate, transfer or dispose of substantially all of their assets; (vi) incur additional indebtedness; (vii) use the proceeds from sales of assets, including capital stock of restricted subsidiaries (in the case of the 2028 First Lien Notes); and (viii) enter into transactions with affiliates. We are currently in compliance with all covenants under our debt documents and expect to remain in compliance for the foreseeable future.
For further information on our long-term debt, see Note 10.
The following tables present summarized financial information of the Company and the Guarantor Subsidiaries on a combined basis.  Consistent with the presentation of discontinued operations on the accompanying consolidated statements of operations as a separate line below (loss) income from continuing operations, the operating results of Guarantor Subsidiaries that are part of discontinued operations are only included in the table below within net income.  The combined summarized financial information eliminates intercompany balances and transactions among the Company and the Guarantor Subsidiaries and equity in earnings and investments in any Guarantor Subsidiaries or Non-Guarantor Subsidiaries. The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and Guarantor Subsidiaries.
36

 
 
 









Parent and Guarantor Summarized Financial Information
 
March 31,
 


Summarized Balance Sheet
 
2024
 


 
 
in thousands
 


Assets
 
 
 


Due from non-guarantor subsidiaries
 
$
316
 


Current assets
 
 
721,953
 


Noncurrent assets
 
 
625,768
 


Noncurrent receivable from non-guarantor subsidiaries
 
 
78,435
 


 
 
 
 


Liabilities
 
 
 


Due to non-guarantor subsidiaries
 
 
36,721
 


Current liabilities
 
 
307,837
 


Noncurrent liabilities
 
 
1,429,101
 


 
 
 
 


 
 
Year Ended
 


Summarized Statement of Operations
 
March 31, 2024
 


 
 
in thousands
 


Net sales to non-guarantor subsidiaries
 
$
1,663
 


Net sales to unrelated parties
 
 
1,111,289
 


Gross profit
 
 
291,578
 


Loss from continuing operations before income taxes
 
 
(40,484
)


Net income
 
 
495,302
 


 
Our expected future cash flows for the next five years for long-term debt, leases and other obligations are as follows:
 

























 
 
Payments Due by Period
 


Contractual Obligations
 
Total
 
 
Less than1 Year
 
 
1 - 3 Years
 
 
4 - 5 Years
 
 
After5 Years
 


 
 
(in thousands)
 


Debt principal
 
$
1,094,798
 
 
$
3,200
 
 
$
5,575
 
 
$
1,082,673
 
 
$
3,350
 


Debt interest(1)
 
 
387,692
 
 
 
97,975
 
 
 
195,471
 
 
 
93,648
 
 
 
598
 


Operating leases
 
 
21,352
 
 
 
4,002
 
 
 
6,979
 
 
 
3,301
 
 
 
7,070
 


Purchase obligations
 
 
826,029
 
 
 
623,196
 
 
 
198,881
 
 
 
3,770
 
 
 
181
 


Total
 
$
2,329,870
 
 
$
728,374
 
 
$
406,905
 
 
$
1,183,393
 
 
$
11,199
 


 
 
(1)Includes fixed-rate interest only.
The above table excludes unrecognized tax benefits of approximately $12.3 million as of March 31, 2024, since we cannot predict with reasonable certainty the timing of cash settlements with the respective taxing authorities. 
In addition to the financial obligations detailed in the table above, we also had obligations related to our benefit plans at March 31, 2024, as detailed in the following table. Our other postretirement benefits are not required to be funded in advance, so benefit payments are paid as they are incurred. Our expected net contributions and payments are included in the table below:
 









 
 
PensionBenefits
 


 
 
(in thousands)
 


Projected benefit obligation at March 31, 2024
 
$
1,557,780
 


Plan assets at March 31, 2024
 
 
1,280,191
 


Projected contributions by fiscal year
 
 
 


2025
 
 
24,278
 


2026
 
 
41,757
 


2027
 
 
36,732
 


2028
 
 
32,806
 


2029
 
 
26,263
 


Total 2025 - 2029
 
$
161,836
 


 
Our total expected remaining net contributions to our qualified U.S. defined benefit pension plans in years beyond fiscal 2029 are approximately $20.7 million.  Current plan documents reserve our right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees.
37

 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations, and that require the use of complex and subjective estimates based upon past experience and management's judgment. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates. Below are those policies applied in preparing our consolidated financial statements that management believes are the most dependent on the application of estimates and assumptions. For additional accounting policies, refer to Note 2 to the accompanying consolidated financial statements.
Revenue Recognition and Contract Balances
Our accounting policy regarding revenue recognition is disclosed in Note 2 to the consolidated financial statements.  As described in Note 2, for certain contracts and performance obligations, we are required to exercise judgment when developing assumptions regarding expected total costs to fulfill performance obligations, variable consideration, and the standalone selling price of a performance obligation.  Specifically, assumptions regarding the total costs require judgment with regard to materials, labor, and overhead costs that are affected by our ability to achieve technical requirements and schedule requirements, as well as our estimation of internal and subcontractor performance projections, anticipated volume, asset utilization, and inflation trends.  We continually review and update our assumptions based on market trends and program performance. When we satisfy a performance obligation and recognize revenue over time, material changes in assumptions may result in positive or negative cumulative catch-up adjustments related to revenues previously recognized or, in some cases, forward loss contract reserves. 
Commitments and Contingencies
Our results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement, and claims for third-party property damage or personal injury stemming from alleged environmental torts. We record accruals for legal matters or other potential loss contingencies when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We make adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel, and other information or events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted claims, our experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms or commercial negotiations, and the matter's status. Considerable judgment is required in determining whether to establish a contingent loss accrual when an adverse judgment is rendered against the Company in a court proceeding. In such situations, we will not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. Refer to Note 17 for further disclosure regarding commitments and contingencies. 
Postretirement Plans
Certain of our current and former employees participate in defined benefit pension and other postretirement defined benefit plans (collectively, referred to as “defined benefit plans”) in the United States and the United Kingdom, which we sponsor. The determination of projected benefit obligations and the recognition of expenses related to defined benefit pension plans are dependent on various assumptions. The most significant of these assumptions are the discount rates and the long-term expected rates of return on plan assets. Actual results that differ from our assumptions are accumulated and amortized for each plan to the extent required over the estimated future life expectancy of plan participants. We could be required to make future contributions to our defined benefit pension and post-retirement benefit plans as a result of adverse changes in interest rates and the capital markets. Adverse changes in the securities markets or interest rates, changes in actuarial assumptions, and legislative or other regulatory actions could substantially increase the costs of these plans and could result in a requirement to contribute additional funds to the plans.  The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-effective manner possible as demographics, life expectancy and country-specific pension funding rules change. 
Significant Assumptions
We develop assumptions using relevant experience, in conjunction with market-related data for each plan. Assumptions are reviewed annually with third party consultants and adjusted as appropriate. Refer to Note 15 for details regarding the assumptions used to estimate projected benefit obligations and net periodic benefit cost as they pertain to our defined benefit pension plans. 
Expected Return on Plan Assets
38

 
We determine our expected return on plan assets by evaluating both historical returns and estimates of future returns. Specifically, we consider the plan’s actual historical annual return on assets and historical broad market returns over long-term time frames based on our strategic allocation, which is detailed in Note 15. Future returns are based on independent estimates of long-term asset class returns. Based on this approach, the weighted average long-term expected annual rate of return on assets was estimated at 7.94% for both fiscal years 2024 and 2023.
Discount Rate
The discount rate is used to calculate the present value of expected future benefit payments at the measurement date. A decrease in the discount rate increases the present value of benefit obligations and generally decreases pension expense. The discount rate assumption is based on current investment yields of high-quality fixed income investments during the retirement benefits maturity period. The pension discount rate is determined by considering an interest rate yield curve comprising AAA/AA bonds, with maturities between zero and thirty years, developed by the plan’s actuaries. Annual benefit payments are then discounted to present value using this yield curve to develop a single discount rate matching the plan’s characteristics.  The discount rate assumption will change from measurement date to measurement date as market yields on high quality corporate bonds change.
Sensitivity Analysis
Pension Expense
A 25 basis point change in each of the long-term expected rate of return on plan assets and discount rate would have the following effect on the combined U.S. defined benefit pension plans’ pension income for the next 12 months:
 













 
 
Increase/(Decrease) in Pension Income
 


 
 
25 Basis Point Increase
 
 
25 Basis Point Decrease
 


 
 
(In thousands)
 


Expected long-term rate of return on plan assets
 
$
3,113
 
 
$
(3,113
)


Discount rate
 
$
(140
)
 
$
165
 


 
Projected Benefit Obligation
Funded status is derived by subtracting the respective year-end values of the projected benefit obligations (“PBO”) from the fair value of plan assets. The sensitivity of the PBO to changes in the discount rate varies depending on the magnitude and direction of the change in the discount rate. Refer to Note 15 for a quantitative sensitivity analysis for the PBO.
Income Tax
We follow ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
 
We recognize deferred tax assets and liabilities based on the differences between the financial statement basis and the tax basis of assets, liabilities, net operating losses and tax carryforwards. A valuation allowance is required to be recognized to reduce the recorded deferred tax asset to the amount that will more likely than not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income by jurisdiction during the periods in which those temporary differences become deductible or when carryforwards can be utilized. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in this assessment. As of March 31, 2024, we have a valuation allowance against substantially all of our net deferred tax assets given the insufficient positive evidence to support the realization of our deferred tax assets.  A reduction in the valuation allowance could result in a significant decrease in income tax expense in the period that the reduction is recorded.  However, the exact timing and amount of the reduction in our valuation allowance are unknown at this time and will be subject to the earnings level we achieve as well as our projected income in future periods. 
Recently Issued Accounting Pronouncements
Refer to Note 1 for disclosure of the effects of recently issued accounting guidance, if any, that are significant to our financial reporting.
39

 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Foreign Exchange Risk
We are subject to foreign currency exchange rate risk relating to receipts from customers and payments to suppliers in foreign currencies. We use foreign currency forward contracts to hedge the price risk associated with forecasted foreign denominated payments related to our ongoing business. Foreign currency forward contracts are sensitive to changes in foreign currency exchange rates. At March 31, 2024, a 10% change in the exchange rate in our portfolio of foreign currency contracts would not have a material impact on the unrecognized gains or losses recognized within operating income. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments do not create material market risk.
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our long-term debt. Our long-term debt is carried at amortized cost and fluctuations in interest rates do not impact our consolidated financial statements. However, the fair value of our outstanding debt, which pays interest at a fixed rate, will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.  The information below summarizes our market risks associated with debt obligations and should be read in conjunction with Note 10 of the notes to the accompanying consolidated financial statements.
The following table presents principal cash flows and the related interest rates. Fixed interest rates disclosed represent the weighted average rate as of March 31, 2024.
Expected Years of Maturity

































 
 
Next12 Months
 
 
13 - 24Months
 
 
25 - 36Months
 
 
37 - 48Months
 
 
49 - 60Months
 
 
Thereafter
 
 
Total
 


Fixed rate cash flows (in thousands)
 
$
3,200
 
 
$
2,838
 
 
$
2,737
 
 
$
1,080,737
 
 
$
1,936
 
 
$
3,350
 
 
$
1,094,798
 


Weighted average interest rate (%)
 
 
8.96
%
 
 
8.97
%
 
 
8.98
%
 
 
8.98
%
 
 
8.10
%
 
 
7.33
%
 
 
 


 
There are no other significant market risk exposures.
 
40

 
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of Triumph Group, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Triumph Group, Inc. (the Company) as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders' deficit and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 31, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Realizability of Deferred Tax Assets
 







Description of the Matter
 
As described in Note 12 of the consolidated financial statements, at March 31, 2024, the Company had deferred tax assets for deductible temporary differences and tax attributes of $42.7 million (net of a $399.2 million valuation allowance). Deferred tax assets are reduced by a valuation allowance if, based upon the weight of all available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.Auditing the Company’s analysis of the realizability of its deferred tax assets required complex auditor judgment because the amounts are material to the financial statements and the assessment process involves significant judgment to determine the future reversal pattern of existing taxable temporary 


41

 







 
 
differences and other assumptions of future taxable income that may be affected by future market or economic conditions. 


How We Addressed the Matter in Our Audit
 
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets. This included controls over the scheduling of the future reversal patterns of existing taxable temporary differences that have been identified as a source of future taxable income.To test the Company’s assessment of the realizability of deferred tax assets and the resulting valuation allowance, our audit procedures included, among others, testing the Company’s calculation of future taxable income from the reversal of existing temporary taxable differences and evaluating the scheduling of the reversal patterns. In addition, we compared taxable income in prior carryback years, if any, to the Company’s income tax returns; considered the feasibility of tax planning strategies; and, evaluated projected future taxable income exclusive of reversing temporary differences and carryforwards. We involved our tax professionals to assist in evaluating the application of tax law, including any changes in the tax law, in the Company’s consideration of the sources of future taxable income.


 
Defined Benefit Pension Obligations
 







Description of the Matter
 
At March 31, 2024, the Company’s aggregate defined benefit pension obligation was $1.6 billion and the net periodic benefit pension expense was $6.1 million. As described in Note 15 of the consolidated financial statements, the Company updates the estimates used to measure the defined benefit pension obligation and plan assets in the fourth quarter and upon a remeasurement event to reflect the actual return on plan assets and updated actuarial assumptions.Auditing the defined benefit pension obligations and the related net periodic pension benefit expense required complex auditor judgment and technical expertise due to the judgmental nature of the actuarial assumptions (e.g., discount rate, mortality rate, expected return on plan assets) used in the measurement process. These assumptions had a significant effect on the projected benefit obligation and the net periodic pension benefit expense. 


How We Addressed the Matter in Our Audit
 
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s determination of the defined benefit pension obligation calculations, the significant actuarial assumptions described above and the data inputs provided to the Company’s actuarial specialists.To test the defined benefit pension benefit obligation, and the related net periodic pension benefit expense, our audit procedures included, among others, evaluating the methodology used, the significant actuarial assumptions described above, the underlying data used by management and its actuaries and the appropriateness of management’s judgments in applying the authoritative accounting literature. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the defined benefit pension from prior year resulting from the change in service cost, interest cost, benefit payments, and actuarial gains and losses. In addition, we involved our actuarial specialists to assist in evaluating management’s methodology for determining the actuarial assumptions. For example, we evaluated management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the defined benefit pension obligation. As part of this assessment, we compared the projected defined benefit pension cash flows to prior year amounts and compared the current year benefits paid to the prior year projected cash flows. To evaluate the mortality rate, we assessed whether the information is consistent with publicly available information, and whether any market data adjusted for entity-specific adjustments were applied. We also tested the completeness and accuracy of the underlying data, including the participant data provided to the Company’s actuarial specialists. Lastly, to evaluate the expected return on plan assets, we assessed whether management’s assumptions were consistent with a range of returns for a portfolio of comparative investments.


 
42

 
/s/ Ernst & Young LLP
 
We have served as the Company’s auditor since 1993.
 
Philadelphia, Pennsylvania
May 31, 2024
 
43

 
TRIUMPH GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
 













 
 
March 31,
 
 
March 31,
 


 
 
2024
 
 
2023
 


ASSETS
 
 
 
 
 
 


Current assets:
 
 
 
 
 
 


Cash and cash equivalents
 
$
392,511
 
 
$
227,403
 


Trade and other receivables, less allowance for credit losses   of $4,773 and $5,477
 
 
138,272
 
 
 
156,116
 


Contract assets
 
 
74,289
 
 
 
86,740
 


Inventory, net
 
 
317,671
 
 
 
309,084
 


Prepaid expenses and other current assets
 
 
16,626
 
 
 
14,073
 


Assets held for sale - current
 
 
—
 
 
 
140,096
 


Total current assets
 
 
939,369
 
 
 
933,512
 


Property and equipment, net
 
 
144,287
 
 
 
138,622
 


Goodwill
 
 
510,687
 
 
 
509,449
 


Intangible assets, net
 
 
65,063
 
 
 
73,898
 


Other, net
 
 
26,864
 
 
 
28,697
 


Assets held for sale - noncurrent
 
 
—
 
 
 
30,666
 


Total assets
 
$
1,686,270
 
 
$
1,714,844
 


LIABILITIES AND STOCKHOLDERS' DEFICIT
 
 
 
 
 
 


Current liabilities:
 
 
 
 
 
 


Current portion of long-term debt
 
$
3,200
 
 
 
3,162
 


Accounts payable
 
 
167,349
 
 
 
173,575
 


Contract liabilities
 
 
55,858
 
 
 
44,095
 


Accrued expenses
 
 
129,855
 
 
 
141,679
 


Liabilities related to assets held for sale - current
 
 
—
 
 
 
34,413
 


Total current liabilities
 
 
356,262
 
 
 
396,924
 


Long-term debt, less current portion
 
 
1,074,999
 
 
 
1,688,620
 


Accrued pension and other postretirement benefits
 
 
283,634
 
 
 
359,375
 


Deferred income taxes
 
 
7,268
 
 
 
7,268
 


Other noncurrent liabilities
 
 
68,521
 
 
 
59,988
 


Liabilities related to assets held for sale - noncurrent
 
 
—
 
 
 
65
 


Stockholders' deficit:
 
 
 
 
 
 


Common stock, $.001 par value, 200,000,000 and 100,000,000 shares authorized, 76,923,691   and 65,432,589 shares issued; 76,923,691 and 65,432,589 outstanding
 
 
77
 
 
 
65
 


Capital in excess of par value
 
 
1,107,750
 
 
 
964,741
 


Accumulated other comprehensive loss
 
 
(517,069
)
 
 
(554,646
)


Accumulated deficit
 
 
(695,172
)
 
 
(1,207,556
)


Total stockholders' deficit
 
 
(104,414
)
 
 
(797,396
)


Total liabilities and stockholders' deficit
 
$
1,686,270
 
 
$
1,714,844
 


 
See accompanying notes to consolidated financial statements. 
44

 
TRIUMPH GROUP, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Net sales
 
$
1,192,043
 
 
$
1,130,562
 
 
$
1,262,704
 


Operating costs and expenses:
 
 
 
 
 
 
 
 
 


Cost of sales (exclusive of depreciation shown separately below)
 
 
869,201
 
 
 
809,882
 
 
 
928,637
 


Selling, general and administrative
 
 
180,247
 
 
 
191,087
 
 
 
184,255
 


Depreciation and amortization
 
 
29,625
 
 
 
32,259
 
 
 
45,509
 


Legal contingencies loss
 
 
7,338
 
 
 
—
 
 
 
—
 


Impairment of long-lived assets
 
 
—
 
 
 
—
 
 
 
2,308
 


Restructuring
 
 
6,970
 
 
 
3,172
 
 
 
19,221
 


Loss (gain) on sale of assets and businesses
 
 
12,208
 
 
 
(101,523
)
 
 
9,294
 


 
 
 
1,105,589
 
 
 
934,877
 
 
 
1,189,224
 


Operating income
 
 
86,454
 
 
 
195,685
 
 
 
73,480
 


Non-service defined benefit income
 
 
(2,372
)
 
 
(19,664
)
 
 
(5,373
)


Debt modification and extinguishment loss
 
 
1,694
 
 
 
33,044
 
 
 
11,624
 


Warrant remeasurement gain, net
 
 
(8,545
)
 
 
(8,683
)
 
 
—
 


Interest expense and other, net
 
 
123,021
 
 
 
115,211
 
 
 
113,080
 


(Loss) income from continuing operations before income taxes
 
 
(27,344
)
 
 
75,777
 
 
 
(45,851
)


Income tax expense
 
 
7,123
 
 
 
3,360
 
 
 
4,526
 


(Loss) income from continuing operations
 
 
(34,467
)
 
 
72,417
 
 
 
(50,377
)


Income from discontinued operations, net of tax expense of $11,788, $2,728, and $397, respectively
 
 
546,851
 
 
 
17,176
 
 
 
7,619
 


Net income (loss)
 
$
512,384
 
 
$
89,593
 
 
$
(42,758
)


(Loss) earnings per share—basic:
 
 
 
 
 
 
 
 
 


(Loss) earnings per share - continuing operations
 
$
(0.46
)
 
$
1.12
 
 
$
(0.78
)


Earnings per share - discontinued operations
 
 
7.38
 
 
 
0.26
 
 
 
0.12
 


Earnings (loss) per share
 
$
6.92
 
 
$
1.38
 
 
$
(0.66
)


Weighted average common shares outstanding—basic
 
 
74,149
 
 
 
65,021
 
 
 
64,538
 


Earnings (loss) per share—diluted:
 
 
 
 
 
 
 
 
 


(Loss) earnings per share - continuing operations
 
$
(0.46
)
 
$
0.96
 
 
$
(0.78
)


Earnings per share - discontinued operations
 
 
7.38
 
 
 
0.24
 
 
 
0.12
 


Earnings (loss) per share
 
$
6.92
 
 
$
1.20
 
 
$
(0.66
)


Weighted average common shares outstanding—diluted
 
 
74,149
 
 
 
71,721
 
 
 
64,538
 


 
 
 
 
 
 
 
 
 
 


 
See accompanying notes to consolidated financial statements. 
45

 
TRIUMPH GROUP, INC.
Consolidated Statements of Comprehensive Income (Loss) 
(Dollars in thousands)
 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Net income (loss)
 
$
512,384
 
 
$
89,593
 
 
$
(42,758
)


Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 


Foreign currency translation adjustment
 
 
5,057
 
 
 
(1,273
)
 
 
(5,772
)


Defined benefit pension plans and other postretirement benefits:
 
 
 
 
 
 
 
 
 


Amounts arising during the period - net of tax expense
 
 
 
 
 
 
 
 
 


Prior service credit, net of taxes of $0, $0, and $0, respectively
 
 
—
 
 
 
—
 
 
 
2,902
 


Actuarial gain (loss), net of taxes of $0, $0, and $0, respectively
 
 
12,511
 
 
 
(113,232
)
 
 
41,756
 


Reclassification to net income (loss) - net of tax expense
 
 
 
 
 
 
 
 
 


Amortization of net loss, net of taxes of $0, $0, and $0, respectively
 
 
26,159
 
 
 
26,728
 
 
 
34,082
 


Recognized prior service credits, net of taxes of $0, $0, and $0, respectively
 
 
(5,002
)
 
 
(5,002
)
 
 
(4,845
)


Total defined benefit pension plans and other postretirement benefits income (expense), net of taxes
 
 
33,668
 
 
 
(91,506
)
 
 
73,895
 


Cash flow hedges:
 
 
 
 
 
 
 
 
 


Unrealized gain (loss) arising during the period, net of tax expense of $0, $0, and $0, respectively
 
 
796
 
 
 
2,265
 
 
 
(2,244
)


Reclassification of (gain) loss included in net earnings, net of tax expense of $0, $0, and $0, respectively
 
 
(1,944
)
 
 
(778
)
 
 
959
 


Net unrealized (loss) gain on cash flow hedges, net of tax
 
 
(1,148
)
 
 
1,487
 
 
 
(1,285
)


Total other comprehensive income (loss)
 
 
37,577
 
 
 
(91,292
)
 
 
66,838
 


Total comprehensive income (loss)
 
$
549,961
 
 
$
(1,699
)
 
$
24,080
 


 
See accompanying notes to consolidated financial statements. 
46

 
TRIUMPH GROUP, INC.
Consolidated Statements of Stockholders' Deficit
(Dollars in thousands)
 

































 
 
OutstandingShares
 
 
CommonStockAll Classes
 
 
Capital inExcess ofPar Value
 
 
TreasuryStock
 
 
AccumulatedOtherComprehensiveLoss
 
 
AccumulatedDeficit
 
 
Total
 


March 31, 2021
 
 
64,185,001
 
 
$
64
 
 
$
978,272
 
 
$
(12,606
)
 
$
(530,192
)
 
$
(1,254,391
)
 
$
(818,853
)


Net loss
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(42,758
)
 
 
(42,758
)


Foreign currency translation   adjustment
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(5,772
)
 
 
—
 
 
 
(5,772
)


Pension liability adjustment, net of   income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
73,895
 
 
 
—
 
 
 
73,895
 


Change in fair value of foreign currency   hedges, net of income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(1,285
)
 
 
—
 
 
 
(1,285
)


Share-based compensation
 
 
565,168
 
 
 
—
 
 
 
(5,332
)
 
 
15,266
 
 
 
—
 
 
 
—
 
 
 
9,934
 


Repurchase of restricted shares for   minimum tax obligation
 
 
(173,009
)
 
 
—
 
 
 
—
 
 
 
(3,249
)
 
 
—
 
 
 
—
 
 
 
(3,249
)


Employee stock purchase plan
 
 
37,222
 
 
 
—
 
 
 
172
 
 
 
493
 
 
 
—
 
 
 
—
 
 
 
665
 


March 31, 2022
 
 
64,614,382
 
 
$
64
 
 
$
973,112
 
 
$
(96
)
 
$
(463,354
)
 
$
(1,297,149
)
 
$
(787,423
)


Net loss
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
89,593
 
 
 
89,593
 


Foreign currency translation   adjustment
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(1,273
)
 
 
—
 
 
 
(1,273
)


Pension liability adjustment, net of   income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(91,506
)
 
 
—
 
 
 
(91,506
)


Change in fair value of foreign currency   hedges, net of income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
1,487
 
 
 
—
 
 
 
1,487
 


Share-based compensation
 
 
554,169
 
 
 
1
 
 
 
9,009
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
9,010
 


Repurchase of restricted shares for   minimum tax obligation
 
 
(194,728
)
 
 
—
 
 
 
—
 
 
 
(3,547
)
 
 
—
 
 
 
—
 
 
 
(3,547
)


Retirement of treasury shares
 
 
—
 
 
 
—
 
 
 
(3,643
)
 
 
3,643
 
 
 
—
 
 
 
—
 
 
 
—
 


Employee stock purchase plan
 
 
48,623
 
 
 
—
 
 
 
660
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
660
 


Issuance of warrants on common shares
 
 
—
 
 
 
—
 
 
 
(19,500
)
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(19,500
)


Warrant exercises, net of    income taxes of $0
 
 
410,143
 
 
 
—
 
 
 
5,103
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
5,103
 


March 31, 2023
 
 
65,432,589
 
 
$
65
 
 
$
964,741
 
 
$
—
 
 
$
(554,646
)
 
$
(1,207,556
)
 
$
(797,396
)


Net income
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
512,384
 
 
 
512,384
 


Foreign currency translation   adjustment
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
5,057
 
 
 
—
 
 
 
5,057
 


Pension liability adjustment, net of   income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
33,668
 
 
 
—
 
 
 
33,668
 


Change in fair value of foreign currency   hedges, net of income taxes of $0
 
 
—
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(1,148
)
 
 
—
 
 
 
(1,148
)


Share-based compensation
 
 
511,823
 
 
 
—
 
 
 
9,398
 
 
 
47
 
 
 
—
 
 
 
—
 
 
 
9,445
 


Repurchase of restricted shares for   minimum tax obligation
 
 
(134,177
)
 
 
—
 
 
 
—
 
 
 
(1,629
)
 
 
—
 
 
 
—
 
 
 
(1,629
)


Retirement of treasury shares
 
 
—
 
 
 
—
 
 
 
(718
)
 
 
761
 
 
 
—
 
 
 
—
 
 
 
43
 


Employee stock purchase plan
 
 
55,220
 
 
 
—
 
 
 
598
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
598
 


Warrant exercises, net of    income taxes of $0
 
 
7,858,236
 
 
 
8
 
 
 
95,420
 
 
 
—
 
 
 
—
 
 
 
—
 
 
 
95,428
 


Issuance of shares on pension contribution
 
 
3,200,000
 
 
 
4
 
 
 
38,311
 
 
 
821
 
 
 
—
 
 
 
—
 
 
 
39,136
 


March 31, 2024
 
 
76,923,691
 
 
$
77
 
 
$
1,107,750
 
 
$
—
 
 
$
(517,069
)
 
$
(695,172
)
 
$
(104,414
)


See accompanying notes to consolidated financial statements. 
47

 
TRIUMPH GROUP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
 

















 
 
Fiscal Year Ended March 31
 


 
 
2024
 
 
2023
 
 
2022
 


Operating Activities
 
 
 
 
 
 
 
 
 


Net income
 
$
512,384
 
 
$
89,593
 
 
$
(42,758
)


Adjustments to reconcile net income to net cash provided by (used in)    operating activities:
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
 
33,250
 
 
 
35,581
 
 
 
49,635
 


Impairment of long-lived assets
 
 
—
 
 
 
—
 
 
 
2,308
 


Amortization of acquired contract liability
 
 
(2,721
)
 
 
(2,500
)
 
 
(5,871
)


(Gain) loss on sale of assets and businesses
 
 
(556,161
)
 
 
(101,523
)
 
 
9,294
 


Curtailments, settlements, withdrawals, and special termination benefits loss, net
 
 
—
 
 
 
14,644
 
 
 
52,005
 


Loss on modification and extinguishment of debt
 
 
1,694
 
 
 
32,613
 
 
 
—
 


Other amortization included in interest expense
 
 
5,925
 
 
 
6,416
 
 
 
9,047
 


Provision for credit losses
 
 
1,136
 
 
 
1,594
 
 
 
452
 


Provision for deferred income taxes
 
 
—
 
 
 
14
 
 
 
25
 


Warrants remeasurement gain
 
 
(8,545
)
 
 
(9,796
)
 
 
—
 


Share-based compensation
 
 
9,445
 
 
 
8,913
 
 
 
9,782
 


Changes in other assets and liabilities, excluding the effects of   acquisitions and divestitures:
 
 
 
 
 
 
 
 
 


Trade and other receivables
 
 
7,879
 
 
 
(26,433
)
 
 
2,822
 


Contract assets
 
 
9,584
 
 
 
(9,055
)
 
 
702
 


Inventories
 
 
(17,460
)
 
 
(28,187
)
 
 
25,642
 


Prepaid expenses and other current assets
 
 
(2,919
)
 
 
1,970
 
 
 
(1,122
)


Accounts payable, accrued expenses, and contract liabilities
 
 
13,506
 
 
 
(35,733
)
 
 
(189,412
)


Accrued pension and other postretirement benefits
 
 
(3,916
)
 
 
(32,562
)
 
 
(58,597
)


Other, net
 
 
6,362
 
 
 
2,200
 
 
 
(970
)


Net cash provided by (used in) operating activities
 
 
9,443
 
 
 
(52,251
)
 
 
(137,016
)


Investing Activities
 
 
 
 
 
 
 
 
 


Capital expenditures
 
 
(21,827
)
 
 
(20,676
)
 
 
(19,660
)


Proceeds from (payments on) sale of assets and businesses
 
 
713,413
 
 
 
(6,220
)
 
 
224,518
 


Investment in joint venture
 
 
(1,661
)
 
 
(272
)
 
 
(2,101
)


Purchase of facility related to divested businesses
 
 
—
 
 
 
—
 
 
 
(21,550
)


Net cash provided by (used in) investing activities
 
 
689,925
 
 
 
(27,168
)
 
 
181,207
 


Financing Activities
 
 
 
 
 
 
 
 
 


Proceeds from issuance of long-term debt
 
 
2,000
 
 
 
1,235,000
 
 
 
107
 


Retirement of debt and finance lease obligations
 
 
(608,701
)
 
 
(1,126,501
)
 
 
(380,009
)


Payment of deferred financing costs
 
 
(2,368
)
 
 
(17,097
)
 
 
(400
)


Proceeds on issuance of common stock, net of issuance costs
 
 
79,961
 
 
 
4,090
 
 
 
—
 


Premium on redemption of long-term debt
 
 
(3,600
)
 
 
(26,157
)
 
 
(9,108
)


Repurchase of shares for share-based compensation   minimum tax obligation
 
 
(1,629
)
 
 
(3,547
)
 
 
(3,249
)


Net cash (used in) provided by financing activities
 
 
(534,337
)
 
 
65,788
 
 
 
(392,659
)


Effect of exchange rate changes on cash
 
 
77
 
 
 
156
 
 
 
(536
)


Net change in cash and cash equivalents
 
 
165,108
 
 
 
(13,475
)
 
 
(349,004
)


Cash and cash equivalents at beginning of period
 
 
227,403
 
 
 
240,878
 
 
 
589,882
 


Cash and cash equivalents at end of period
 
$
392,511
 
 
$
227,403
 
 
$
240,878
 


 
See accompanying notes to consolidated financial statements. 
48

 
Triumph Group, Inc.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
 
 
 
1.    BACKGROUND AND BASIS OF PRESENTATIONTriumph Group, Inc. ("Triumph" or the "Company") is a Delaware corporation which, through its operating subsidiaries, designs, engineers, manufactures and sells products for the global aerospace original equipment manufacturers ("OEMs") of aircraft and aircraft components and repairs and overhauls aircraft components and accessories for commercial airline, air cargo carrier and military customers on a worldwide basis. Triumph and its subsidiaries (collectively, the "Company") are organized based on the products and services that they provide. The Company has two reportable segments: Systems & Support and Interiors. Systems & Support consists of the Company’s operations that provide integrated solutions, including design; development; and support of proprietary components, subsystems and systems, as well as production of complex assemblies using external designs.  Capabilities include hydraulic, mechanical and electromechanical actuation, power and control; a complete suite of aerospace gearbox solutions, including engine accessory gearboxes and helicopter transmissions; active and passive heat exchange technology; fuel pumps, fuel metering units, and Full Authority Digital Electronic Control fuel systems; and hydromechanical and electromechanical primary and secondary flight controls. As disclosed in Note 3, in December 2023 the Company entered into a definitive agreement with AAR Corp. (“AAR”), to sell Systems & Support's maintenance, repair, and overhaul operations located in Wellington, Kansas; Grand Prairie, Texas; San Antonio, Texas; Hot Springs, Arkansas; and Chonburi, Thailand (“Product Support”).  As a result of this agreement, the Company has classified the Product Support results of operations for all periods presented as discontinued operations, and has classified the assets and liabilities of the disposal group as held for sale as of March 31, 2023, and these operations are no longer reported as part of the Systems & Support reportable segment. Interiors consists of the Company’s operations that have historically supplied commercial, business, and regional manufacturers with large metallic structures and continues to supply aircraft interior systems, including air ducting and thermal acoustic insulations systems. Subsequent to the divestitures disclosed in Note 3, the remaining operations of Interiors are those that supply commercial and regional manufacturers with aircraft interior systems.The accompanying consolidated financial statements include the accounts of Triumph and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated from the consolidated financial statements.The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.  
 
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and Cash EquivalentsCash equivalents consist of highly liquid investments with a maturity of three months or less at the time of purchase. Fair value of cash equivalents approximates carrying value.Trade and Other Receivables, netTrade and other receivables are recorded net of an allowance for expected credit losses. Trade and other receivables include amounts billed and currently due from customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company pools receivables that share underlying risk characteristics and records the allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific collectibility matters when they arise. The Company writes off balances against the allowance for expected credit losses when collectibility is deemed remote. The Company's trade and other receivables are exposed to credit risk; however, the risk is limited due to the diversity of the customer base. For the years ended March 31, 2024, 2023, and 2022, credit loss expense and write-offs were immaterial.  
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Trade and other receivables, net composed of the following: 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Total trade receivables
 
$
139,012
 
 
$
119,583
 


Other receivables
 
 
4,033
 
 
 
42,010
 


Total trade and other receivables
 
 
143,045
 
 
 
161,593
 


Less: Allowance for credit losses
 
 
(4,773
)
 
 
(5,477
)


Total trade and other receivables, net
 
$
138,272
 
 
$
156,116
 

Goodwill and Intangible AssetsThe Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Under ASC 350, goodwill and intangible assets with indefinite lives are not amortized; rather, they are tested for impairment on at least an annual basis. Intangible assets with finite lives are amortized over their useful lives. The Company assesses whether goodwill impairment exists using both the qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed as required by ASC 350 to determine whether a goodwill impairment exists at the reporting unit.The quantitative test is used to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. If the carrying amount exceeds the fair value, then an impairment loss occurs. The impairment is measured by using the amount by which the carrying value exceeds the fair value not to exceed the amount of recorded goodwill. The determination of the fair value of its reporting units is based, among other things, on estimates of future operating performance of the reporting unit being valued. The Company is required to complete an impairment test for goodwill and record any resulting impairment losses at least annually. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments.When performing the quantitative impairment test, the Company's methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company's cost of capital, otherwise known as the discounted cash flow method ("DCF"). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of its reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified.  The fair value estimates resulting from the application of these methodologies are based on inputs classified within Level 3 of the fair value hierarchy, as described below. During the fourth quarter of the fiscal years ended March 31, 2024 and 2023, the Company performed its annual goodwill impairment assessment for each of its reporting units with no impairment identified. Finite-lived intangible assets are amortized over their useful lives ranging from 10 to 30 years. The Company continually evaluates whether events or circumstances have occurred that would indicate that the remaining estimated useful lives of long-lived assets, including intangible assets, may warrant revision or that the remaining balance may not be recoverable. Long-lived assets are evaluated for indicators of impairment. When factors indicate that long-lived assets, including intangible assets, should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets, including intangible assets, is used to measure recoverability based on the primary asset of the asset group. Some of the more important factors management considers include the Company's financial performance relative to expected and historical performance, significant changes in the way the Company manages its operations, negative events that have occurred, and negative industry and economic trends. If the estimated undiscounted cash flows are less than the carrying amount, measurement of the impairment will be based on the difference between the carrying value and fair value of the asset group, generally determined based on the present value of expected future cash flows associated with the use of the asset.See below for the Company's accounting policy regarding fair value measurements and the definition of fair value levels.50
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Revenue Recognition and Contract BalancesThe Company's revenue is principally from contracts with customers to provide design, development, manufacturing, and support services associated with specific customer programs. The Company regularly enters into long-term master supply agreements that establish general terms and conditions and may define specific program requirements. Many agreements include clauses that provide sole supplier status to the Company for the duration of the program’s life. Purchase orders (or authorizations to proceed) are issued pursuant to the master supply agreements. Additionally, a majority of the Company’s agreements with customers include options for future purchases. Such options primarily reduce the administrative effort of issuing subsequent purchase orders and generally do not represent material rights granted to customers. The Company generally enters into agreements directly with its customers and is the principal in substantially all current contracts.The identification of a contract with a customer for purposes of accounting and financial reporting requires an evaluation of the terms and conditions of agreements to determine whether presently enforceable rights and obligations exist. Management considers a number of factors when making this evaluation that include, but are not limited to, the nature and substance of the business exchange, the specific contractual terms and conditions, the promised products and services, the termination provisions in the contract, as well as the nature and execution of the customer’s ordering process and how the Company is authorized to perform work. Generally, presently enforceable rights and obligations are not created until a purchase order is issued by a customer for a specified number of units of product or services. Therefore, the issuance of a purchase order is generally the point at which a contract is identified for accounting and financial reporting purposes.Management identifies the promises to the customer. Promises are generally explicitly stated in each contract, but management also evaluates whether any promises are implied based on the terms of the agreement, past business practice, or other facts and circumstances. Each promise is evaluated to determine if it is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service. The Company considers a number of factors when determining whether a promise is a distinct performance obligation, including whether the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer, whether the Company provides a significant service of integrating goods or services to deliver a combined output to the customer, or whether the goods or services are highly interdependent. The Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs.The transaction price for a contract reflects the consideration the Company expects to receive for fully satisfying the performance obligations in the contract. Typically, the transaction price consists solely of fixed consideration but may include variable consideration for contractual provisions such as unpriced contract modifications, cost-sharing provisions, and other receipts or payments to customers. The Company identifies and estimates variable consideration, typically at the most likely amount the Company expects to receive from its customers. Variable consideration is only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for the contract will not occur, or when the uncertainty associated with the variable consideration is resolved. Consideration paid or payable to a customer is reflected as a reduction in net revenues when the amounts paid are not related to a distinct good or service at the later of when the related revenue is recognized or when the Company pays or promises to pay the consideration to the customer. The Company's contracts with customers generally require payment under normal commercial terms after delivery with payment typically required within 30 to 120 days of delivery. The Company generally is not subject to collecting sales tax and has made an accounting policy election to exclude from the transaction price any sales and other similar taxes collected from customers. As a result, any such collections are accounted for on a net basis.The total transaction price is allocated to each of the identified performance obligations using the relative stand-alone selling price. The objective of the allocation is to reflect the consideration that the Company expects to receive in exchange for the products or services associated with each performance obligation. Stand-alone selling price is the price at which the Company would sell a promised good or service separately to a customer. Stand-alone selling prices are established at contract inception, and subsequent changes in transaction price are allocated on the same basis as at contract inception. When stand-alone selling prices for the Company’s products and services are not observable, the Company uses either the “Expected Cost Plus a Margin” or "Adjusted Market Assessment" approaches to estimate stand-alone selling price. Expected costs are typically derived from the available periodic forecast information.Revenue is recognized when or as control of promised products or services transfers to a customer and is recognized at the amount allocated to each performance obligation associated with the transferred products or services. Service sales, principally representing repair, maintenance, and engineering activities are recognized over the contractual period or as services are rendered. Sales under long-term contracts with performance obligations satisfied over time are recognized using either an input or output method. The Company recognizes revenue over time as it performs on these contracts because of the continuous transfer 51
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) of control to the customer as represented by contractual terms that entitle the Company to the reimbursement of costs plus a reasonable profit for work performed to manufacture products for which the Company has no alternate use or for work performed on a customer-owned asset.With control transferring over time, revenue is recognized based on the extent of progress toward completion of the performance obligation. The Company generally uses the cost-to-cost input method of progress for its contracts because it best depicts the transfer of control to the customer that occurs as work progresses. Under the cost-to-cost method, the extent of progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company reviews its cost estimates on contracts on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic projections. Significant factors that influence these estimates include inflationary trends, technical and schedule risk, internal and subcontractor performance trends, business volume assumptions, and asset utilization.Revenue and cost estimates are regularly monitored and revised based on changes in circumstances. Impacts from changes in estimates of net sales and cost of sales are recognized on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. Forward loss reserves for anticipated losses on long-term contracts are recorded in full when such losses become evident, to the extent required and are included in contract liabilities on the accompanying consolidated balance sheets. The Company believes that the accounting estimates and assumptions made by management are appropriate, however actual results could differ materially from those estimates.For the fiscal year ended March 31, 2024, cumulative catch-up adjustments resulting from changes in estimated contract values and contract costs during the fiscal year were immaterial. For the fiscal year ended March 31, 2023, cumulative catch-up adjustments resulting from changes in estimates increased revenue, operating income, income from continuing operations before income taxes, net income, and diluted earnings per share - continuing operations by approximately $21,208, $27,963, $27,963, $27,963, and $0.39, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2023, included gross favorable adjustments of approximately $32,699 and gross unfavorable adjustments of approximately $4,736. For the fiscal year ended March 31, 2022, cumulative catch-up adjustments resulting from changes in estimates increased revenue and operating income and decreased loss from continuing operations before income taxes, net loss and diluted loss per share - continuing operations by approximately $6,884, $16,042, $16,042, $16,042, and $0.25, respectively. The cumulative catch-up adjustments to operating income for the fiscal year ended March 31, 2022, included gross favorable adjustments of approximately $30,560 and gross unfavorable adjustments of approximately $14,518. Revenues for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer. For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of and obtain the benefits from the products and services. Generally, the shipping terms determine the point in time when control transfers to customers. Shipping and handling activities are not considered performance obligations and related costs are included in cost of sales as incurred.Differences in the timing of revenue recognition and contractual billing and payment terms result in the recognition of contract assets and liabilities. Refer to Note 4 for further discussion.WarrantsOn December 1, 2022, the Company’s board of directors declared a distribution to holders of the Company’s shares of common stock in the form of warrants to purchase shares of common stock (the “Warrants”).  Holders of common stock received three Warrants for every ten shares of common stock held as of December 12, 2022 (the "Record Date"). The Company issued approximately 19.5 million Warrants on December 19, 2022, to holders of record of common stock as of the close of business on the Record Date. Each Warrant represented the right to purchase initially one share of common stock, at an exercise price of $12.35 per Warrant, subject to certain anti-dilution adjustments. Payment for shares of common stock on exercise of Warrants could have been made in (i) cash or (ii) under certain circumstances, certain of the Company's outstanding notes (the "Designated Notes").The common stock warrants were accounted for as derivative liabilities in accordance with ASC 815-40 and included within accrued liabilities on the accompanying consolidated balance sheets. The Company measured the Warrants at fair value as of the 52
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) issuance date using a Monte Carlo pricing model, a Level 3 fair value measurement (as described below), due to the level of market activity. Inherent in the option pricing simulation are assumptions related to expected stock-price volatility, expected life and risk-free interest rate. The Company estimated the volatility of the Warrants based on implied and historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Warrants. The expected life of the Warrants was based on the Company’s ability to redeem the Warrants, subject to a 20 calendar-day notice period, as well as the automatic acceleration of the Expiration Date following the Price Condition Date. During the three months ended December 31, 2022, due to increased trading volume, the Company began remeasuring outstanding Warrants using the Warrants trading price, a Level 1 fair value measurement (as described below).  The Warrants were remeasured at each balance sheet date. Warrants remeasurement adjustments were recognized in warrant remeasurement gain, net on the accompanying consolidated statements of operations. At distribution, the fair value of the Warrants was $19,500. Approximately 7.7 million Warrants were exercised in the year ended March 31, 2024, resulting in total cash proceeds, net of transaction costs, of approximately $79,961, and $8,532 of warrants remeasurement gain was recognized in the year ended March 31, 2024.  On July 6, 2023, the Company redeemed all of the approximately 11.4 million remaining outstanding Warrants for a total redemption price of approximately $11 pursuant to its June 16, 2023, notice of redemption.LeasesThe Company leases office space, manufacturing facilities, land, vehicles, and equipment. The Company determines if an agreement is or contains a lease at the lease inception date and recognizes right-of-use assets (“ROU”) and lease liabilities at the lease commencement date. A ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”).ROU assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. The determination of the length of lease terms is affected by options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The existence of significant economic incentive is the primary consideration when assessing whether the Company is reasonably certain of exercising an option in a lease. Both finance and operating lease ROU assets and liabilities are recognized at commencement date and measured as the present value of lease payments to be made over the lease term. As the interest rate implicit in the lease is not readily available for most of the Company's leases, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date. The lease ROU asset recognized at commencement is adjusted for any lease payments related to initial direct costs, prepayments, and lease incentives.For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, lease expense comprises the amortization of the ROU assets recognized on a straight-line basis generally over the shorter of the lease term or the estimated useful life of the underlying asset and interest on the lease liability. Variable lease payments not dependent on a rate or index are recognized when the event, activity, or circumstance in the lease agreement upon which those payments are contingent is probable of occurring and are presented in the same line of the consolidated balance sheet as the rent expense arising from fixed payments. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.Retirement BenefitsDefined benefit pension plans are recognized in the consolidated financial statements on an actuarial basis. A significant element in determining the Company's pension expense (income) is the expected long-term rate of return on plan assets. This expected return is an assumption as to the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected pension benefit obligation. The Company applies this assumed long-term rate of return to a calculated value of plan assets, which recognizes changes in the fair value of plan assets in a systematic manner over five years. This produces the expected return on plan assets that is included in pension expense (income) . The difference between this expected return and the actual return on plan assets is deferred. The net deferral of past asset gains (losses) affects the calculated value of plan assets and, ultimately, future pension expense (income).The Company periodically experiences events or makes changes to its benefit plans that result in curtailment or special charges. Curtailments are recognized when events occur that significantly reduce the expected years of future service of present employees or eliminates the benefits for a significant number of employees for some or all of their future service.53
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Curtailment losses are recognized when it is probable the curtailment will occur and the effects are reasonably estimable. Curtailment gains are recognized when the related employees are terminated or a plan amendment is adopted, whichever is applicable.From time to time, the Company may enter into transactions that relieve it of primary responsibility for all or more than a minor portion of certain of its pension benefit obligations.  When these transactions are effected through an irrevocable action that relieves the Company of primary responsibility for its pension or other postretirement benefit obligations and eliminates significant risks related to the obligation and the related assets used to effect the transaction, they are considered settlements, as defined by ASC 715, Compensation – Retirement Benefits.  When a transaction meets the definition of a settlement, at the time of settlement the Company recognizes as a gain or loss the pro rata amount of the net gain or loss in accumulated other comprehensive loss based on the proportion of the projected benefit obligation settled to the total projected benefit obligation. As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances impacting the pension costs.At March 31 of each year, the Company determines the fair value of its pension plan assets as well as the discount rate to be used to calculate the present value of plan liabilities. The discount rate is an estimate of the interest rate at which the pension benefits could be effectively settled. In estimating the discount rate, the Company looks to rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of the pension benefits. The Company uses a portfolio of fixed-income securities, which receive at least the second-highest rating given by a recognized ratings agency. ContingenciesContingencies are existing conditions, situations or circumstances involving uncertainty as to possible gain or loss that will ultimately be resolved when future events occur or fail to occur. Such contingencies include, but are not limited to environmental obligations, litigation, regulatory investigations and proceedings, product quality, and gains or losses resulting from other events and developments. Liabilities for loss contingencies are accrued in the amount of the Company's best estimate for the ultimate loss when a loss is considered probable of having been incurred and is reasonably estimable. When there appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. Disclosure is provided for material loss contingencies when a loss is probable but a reasonable estimate cannot be made, and when it is reasonably possible that a loss will be incurred or the amount of a loss will exceed the recorded provision. The Company regularly reviews contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. Contingencies that might result in gains are generally not accrued until the contingencies are resolved and the gain is realized or realizable.  Refer to Note 17 for further disclosure.Fair Value MeasurementsFair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. When determining fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing an asset or liability. The fair value hierarchy has three levels of inputs that may be used to measure fair value: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability; and Level 3—Unobservable inputs for the asset or liability. The Company has applied fair value measurements when measuring the warrants (refer to the above disclosure), when disclosing the fair value of its long-term debt not recorded at fair value (see Note 10) and when measuring its pension and postretirement plan assets (see Note 15).Income TaxesThe Company accounts for income taxes using the asset and liability method. The asset and liability method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of the Company's assets and liabilities. A valuation allowance is provided on deferred taxes if it is determined that it is more likely than not that the asset will not be realized.54
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Management judgment is required to determine the amount of benefit to be recognized in relation to an uncertain tax position. The Company uses a two-step process to evaluate tax positions. The first step requires an entity to determine whether it is more likely than not (greater than 50% chance) that the tax position will be sustained. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The amounts ultimately paid upon resolution of issues raised by taxing authorities may differ materially from the amounts accrued and may materially impact the financial statements of the Company in future periods. The Company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes on its consolidated statements of operations.Warranty ReservesA reserve has been established to provide for the estimated future cost of assurance-type warranties on our delivered products. The Company periodically reviews the reserves and adjustments are made accordingly. A provision for warranty on products delivered is made on the basis of historical experience and identified warranty issues. Warranties cover such factors as non-conformance to specifications and defects in material and workmanship. The majority of the Company's agreements include a three-year warranty, although certain programs have warranties up to 20 years. Warranty provisions and expenditures were immaterial for the years ended March 31, 2024, 2023, and 2022.  Warranty reserves are included in accrued expenses and other noncurrent liabilities on the consolidated balance sheets.  Refer to Note 8 and Note 11 for warranty reserve balances as of March 31, 2024 and 2023. Supplemental Cash Flow InformationIn November 2021, the Company entered into an agreement with the DOT under the AMJP for a grant of up to $21,259. The receipt of the full award was primarily conditioned upon the Company committing to not furlough or lay off a defined group of employees during the six-month period of performance between November 2021 and May 2022.  The Company received approximately $19,400 under the agreement, of which approximately $10,630 was received in the year ended March 31, 2022, and the remainder of which was received in the year ended March 31, 2023.  In July 2022, the Company received a letter from the DOT confirming that the Company had satisfied the reporting requirements under the AMJP.  In the years ended March 31, 2023 and 2022, the Company recognized as a reduction in cost of sales approximately $4,700 and $12,400, respectively.  The balance of the proceeds of approximately $2,300 related to discontinued operations, increasing income from discontinued operations by approximately $600, and $1,700 in the years ended March 31, 2023 and 2022, respectively.For the fiscal years ended March 31, 2024, 2023, and 2022, the Company paid $11,771, $4,565, and $5,382, respectively, for income taxes, net of income tax refunds received. 
3.    DIVESTED OPERATIONS AND ASSETS HELD FOR SALEFiscal 2024 Divestiture and Discontinued OperationsIn December 2023, the Company’s Board of Directors committed to a plan, and the Company entered into a definitive agreement with AAR, to sell Product Support for cash proceeds of $725,000 subject to adjustments related to the closing balance sheet and certain transaction expenses.  This transaction closed on March 1, 2024, and the Company recognized a gain of approximately $548,250, net of transaction costs and certain other purchase price adjustments. The gain is included within discontinued operations on the accompanying consolidated statement of operations.  Product Support companies provide aftermarket maintenance, repair, and overhaul solutions for commercial, regional and military aircraft.  As a result of this transaction, effective in the third quarter of fiscal 2024, we classified our results of operations for all periods presented to reflect Product Support as discontinued operations and classified the assets and liabilities of this disposal group as held for sale on the accompanying consolidated balance sheet as of March 31, 2023.  Under the terms of the purchase agreement, we will continue to guarantee the performance of certain of the divested legal entities pursuant to pre-existing performance guarantee agreements covering existing contracts with specific customers that are expected to be fully satisfied within the next twelve months.  There is no limitation to the maximum potential future liabilities under these guarantee agreements; however, we are fully indemnified by the buyer, AAR, against such losses that may arise from their failure to perform under the related contracts. The Company has also indemnified the buyer for a period of three years from the date of the transaction on product liability or warranty claims related to Product Support products and operations prior to the transaction date to the extent exceeding an aggregate amount of $1,000.  Other than these guarantees, a short-term transition services agreement, commercial purchases and sales which are not significant and are entered into in the ordinary course of business, and other customary short-term transitional activities, the Company will have no further continuing involvement with Product Support. The following table shows the results of Product Support within discontinued operations for each of the periods presented:55
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Major line items constituting pretax income of discontinued operations
 
 
 
 
 
 
 
 
 


Net sales
 
$
240,954
 
 
$
248,566
 
 
$
197,238
 


Operating costs and expenses:
 
 
 
 
 
 
 
 
 


Cost of sales (exclusive of depreciation shown separately below)
 
 
184,304
 
 
 
181,717
 
 
 
144,426
 


Selling, general and administrative
 
 
20,246
 
 
 
19,343
 
 
 
17,815
 


Depreciation and amortization
 
 
3,625
 
 
 
3,322
 
 
 
4,126
 


Restructuring
 
 
—
 
 
 
1,777
 
 
 
74
 


Gain on sale of discontinued operations, net of transaction costs
 
 
(548,250
)
 
 
—
 
 
 
—
 


 
 
 
(340,075
)
 
 
206,159
 
 
 
166,441
 


Operating income
 
 
581,029
 
 
 
42,407
 
 
 
30,797
 


Interest expense and other, net
 
 
22,390
 
 
 
22,503
 
 
 
22,781
 


Income from discontinued operations before income taxes
 
 
558,639
 
 
 
19,904
 
 
 
8,016
 


Income tax expense
 
 
11,788
 
 
 
2,728
 
 
 
397
 


Income from discontinued operations
 
$
546,851
 
 
$
17,176
 
 
$
7,619
 

The Company's accounting policy to allocate to discontinued operations other consolidated interest that is not directly attributable to or related to other operations of the entity based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the disposal transaction to the sum of total net assets of the consolidated group plus consolidated debt, adjusted for debt that will be assumed by the buyer; debt that is required to be paid as a result of the disposal transaction; and debt that can be directly attributed to other operations of the entity.  In applying the above policy, the Company allocated interest expense to discontinued operations of approximately $21,857, $21,619, and $22,646 in the years ended March 31, 2024, 2023, and 2022, respectively.









 
 
March 31,
 


 
 
2023
 


ASSETS
 
 
 


Carrying amount of major classes of assets included as part of discontinued operations:
 
 
 


Trade and other receivables, less allowance for credit losses   of $2,905
 
$
40,659
 


Contract assets
 
 
16,287
 


Inventory, net
 
 
80,161
 


Prepaid expenses and other current assets
 
 
2,989
 


Property and equipment, net
 
 
28,178
 


Other, net
 
 
2,488
 


Total assets of the disposal group classified as held-for-sale in the statement of financial position
 
$
170,762
 


LIABILITIES
 
 
 


Carrying amount of major classes of liabilities included as part of discontinued operations:
 
 
 


Accounts payable
 
$
24,357
 


Contract liabilities
 
 
387
 


Accrued expenses
 
 
9,669
 


Other noncurrent liabilities
 
 
65
 


Total liabilities of the disposal group classified as held-for-sale in the statement of financial position
 
$
34,478
 

The accompanying consolidated statements of cash flows do not present cash flows from discontinued operations separately from cash flows from continuing operations.  Capital expenditures and other operating and investing noncash items of the discontinued operations for the years ended March 31, 2024, 2023, and 2022, were immaterial. Fiscal 2023 DivestituresIn January 2022, the Company’s Board of Directors committed to a plan to sell its manufacturing operations located in Stuart, Florida. In February 2022, the Company entered into a definitive agreement with the buyer of these manufacturing operations. This transaction closed in July 2022. The Company recognized a gain of approximately $96,800, net of transaction costs in fiscal year 2023, which is presented on the accompanying consolidated statements of operations within loss (gain) on sale of assets and businesses for the year ended March 31, 2023. In the year ended March 31, 2024, the Company paid $6,800 to the buyer of the Stuart manufacturing operations and recognized a loss of approximately $3,900 due to the resolution of claims by the buyer related to the accounts payable representation and warranty under the purchase agreement and the finalization of certain 56
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) purchase price adjustments related to the transferred working capital of the divested operations. Additionally, in the year ended March 31, 2024, the Company recognized a loss on sale of approximately $8,300 related to an adjustment that would have reduced the fiscal 2023 gain on sale. Other claims for indemnification with the Buyer of the Stuart facility (refer to Note 17) remain outstanding. The operating results of the Stuart, Florida, manufacturing operations are included within the Interiors reportable segment through the date of divestiture.Fiscal 2022 DivestituresIn May 2020, the Company’s Board of Directors committed to a plan to sell its composites manufacturing operations located in Milledgeville, Georgia and Rayong, Thailand. In August 2020, the Company entered into a definitive agreement with the buyer of the composites manufacturing operations in Georgia and Thailand. In February 2021, the Company entered into a definitive agreement to sell its large structure manufacturing operations in Red Oak, Texas, to the same buyer of the Milledgeville and Rayong composites manufacturing operations.  These transactions closed in May 2021. Upon the completion of the sale of the composites and large structure manufacturing operations, the Company received proceeds of approximately $155,000 net of the purchase of a facility related to the divestiture and other transaction costs and recognized a loss of approximately $6,000, which is presented on the accompanying consolidated statements of operations within loss (gain) on sale of assets and businesses for the year ended March 31, 2022. The operating results of these related operations are included within the Interiors segment through the date of divestiture.  As disclosed in Note 15, as a result of the completed sale of these manufacturing operations, the Company recognized a curtailment loss of approximately $16,000 during the year ended March 31, 2022.In August 2021, the Company’s Board of Directors committed to a plan to sell and license certain legacy product lines of the Company’s Staverton, United Kingdom operations. The transaction included the existing facility and select product lines associated with the site.  The transaction closed in October 2021 for net proceeds of approximately $34,000, and the effect on earnings was insignificant. The operating results of the Staverton, United Kingdom, manufacturing operations were included within the Systems & Support reportable segment through the date of divestiture.As a result of the fiscal 2022 divestitures described above, including routine closing working capital adjustments, the Company recognized total losses of approximately $9,300 in the year ended March 31, 2022.
4.    REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERSDisaggregation of RevenueThe Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time. Additionally, the Company disaggregates revenue based on the end market where products and services are transferred to the customer. The Company’s principal operating segments and related revenue are discussed in Note 20, Segments.The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the years ended March 31, 2024, 2023, and 2022: 

















 
 
Year EndedMarch 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Systems & Support
 
 
 
 
 
 
 
 
 


Satisfied over time
 
$
317,242
 
 
$
322,043
 
 
$
308,637
 


Satisfied at a point in time
 
 
707,667
 
 
 
594,417
 
 
 
518,679
 


Revenue from contracts with customers
 
 
1,024,909
 
 
 
916,460
 
 
 
827,316
 


Amortization of acquired contract liabilities
 
 
2,721
 
 
 
2,500
 
 
 
5,859
 


Total Systems & Support revenue
 
 
1,027,630
 
 
 
918,960
 
 
 
833,175
 


 
 
 
 
 
 
 
 
 
 


Interiors
 
 
 
 
 
 
 
 
 


Satisfied over time
 
$
135,872
 
 
$
189,710
 
 
$
402,194
 


Satisfied at a point in time
 
 
28,541
 
 
 
21,892
 
 
 
27,323
 


Revenue from contracts with customers
 
 
164,413
 
 
 
211,602
 
 
 
429,517
 


Amortization of acquired contract liabilities
 
 
—
 
 
 
—
 
 
 
12
 


Total Interiors revenue
 
 
164,413
 
 
 
211,602
 
 
 
429,529
 


Total revenue
 
$
1,192,043
 
 
$
1,130,562
 
 
$
1,262,704
 

 57
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The following table shows disaggregated net sales by end market (excluding intercompany sales) for the years ended March 31, 2024, 2023, and 2022. 

















 
 
Year EndedMarch 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Systems & Support
 
 
 
 
 
 
 
 
 


OEM Commercial
 
$
368,340
 
 
$
333,809
 
 
$
244,636
 


OEM Military
 
 
261,918
 
 
 
260,943
 
 
 
276,947
 


MRO Commercial
 
 
162,331
 
 
 
123,435
 
 
 
92,299
 


MRO Military
 
 
183,108
 
 
 
165,814
 
 
 
176,073
 


Non-aviation
 
 
49,212
 
 
 
32,459
 
 
 
37,361
 


Revenue from contracts with customers
 
 
1,024,909
 
 
 
916,460
 
 
 
827,316
 


Amortization of acquired contract liabilities
 
 
2,721
 
 
 
2,500
 
 
 
5,859
 


Total Systems & Support revenue
 
$
1,027,630
 
 
$
918,960
 
 
$
833,175
 


 
 
 
 
 
 
 
 
 
 


Interiors
 
 
 
 
 
 
 
 
 


OEM Commercial
 
$
161,923
 
 
$
207,672
 
 
$
400,482
 


OEM Military
 
 
—
 
 
 
108
 
 
 
15,429
 


MRO Commercial
 
 
1,683
 
 
 
2,713
 
 
 
11,154
 


MRO Military
 
 
—
 
 
 
—
 
 
 
1,052
 


Non-aviation
 
 
807
 
 
 
1,109
 
 
 
1,400
 


Revenue from contracts with customers
 
 
164,413
 
 
 
211,602
 
 
 
429,517
 


Amortization of acquired contract liabilities
 
 
—
 
 
 
—
 
 
 
12
 


Total Interiors revenue
 
 
164,413
 
 
 
211,602
 
 
 
429,529
 


Total revenue
 
$
1,192,043
 
 
$
1,130,562
 
 
$
1,262,704
 

 Contract Assets and LiabilitiesContract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific collectibility matters when they arise.  Contract assets are presented net of this reserve on the accompanying consolidated balance sheets. For the years ended March 31, 2024, 2023, and 2022 credit loss expense and write-offs related to contract assets were immaterial.Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and the Company’s measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation, and are recognized prospectively.58
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company’s contract assets and liabilities balances: 

















 
 
March 31, 2024
 
 
March 31, 2023
 
 
Change
 


Contract assets
 
$
74,289
 
 
$
86,740
 
 
$
(12,451
)


Contract liabilities
 
 
(65,358
)
 
 
(44,558
)
 
 
(20,800
)


Net contract asset
 
$
8,931
 
 
$
42,182
 
 
$
(33,251
)

 The change in contract assets is the result of amounts billed in excess of revenue recognized during the year ended March 31, 2024.  The change in contract liabilities was the result of the receipt of additional customer advances in excess of revenue recognized during the year ended March 31, 2024.  For the period ended March 31, 2024, the Company recognized $17,325 of revenue that was included in the contract liability balance at the beginning of the period. Performance ObligationsCustomers generally contract with the Company for requirements in a segment relating to a specific program, and the Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs. A single contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements.As of March 31, 2024, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below. 

























 
 
Total
 
 
Less than1 year
 
 
1-3 years
 
 
4-5 years
 
 
More than 5years
 


Unsatisfied performance obligations
 
$
1,673,278
 
 
$
986,814
 
 
$
675,978
 
 
$
10,486
 
 
$
—
 


 
5.    INVENTORIESInventories are carried at the lower of cost (average-cost or specific-identification methods) or net realizable value. The Company expenses general and administrative costs related to products and services provided essentially under commercial terms and conditions as incurred. The Company determines the costs of inventories sold by the first-in, first-out or average cost methods.The components of inventories are as follows: 













 
 
March 31,
 
 
March 31,
 


 
 
2024
 
 
2023
 


Raw materials
 
$
25,224
 
 
$
26,919
 


Work-in-process, including manufactured and purchased components
 
 
277,471
 
 
 
262,784
 


Finished goods
 
 
12,554
 
 
 
17,000
 


Rotable assets
 
 
2,422
 
 
 
2,381
 


Total inventories
 
$
317,671
 
 
$
309,084
 

Inventories, summarized in the table above, are presented net of valuation reserves of $53,539 and $58,582 as of March 31, 2024 and 2023, respectively
6.    PROPERTY AND EQUIPMENTProperty and equipment, which include equipment under finance lease and leasehold improvements, are recorded at cost and depreciated over the estimated useful lives of the related assets, or the lease term if shorter in the case of leasehold improvements, using the straight-line method. Buildings and improvements are depreciated over a period of 15 to 40 years, and machinery and equipment are depreciated over a period of 7 to 15 years (except for furniture, fixtures and computer equipment, which are depreciated over a period of 3 to 10 years).59
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Net property and equipment is: 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Land
 
$
16,705
 
 
$
16,396
 


Construction-in-process
 
 
15,875
 
 
 
10,942
 


Buildings and improvements
 
 
103,560
 
 
 
97,902
 


Machinery and equipment
 
 
341,355
 
 
 
377,075
 


 
 
 
477,495
 
 
 
502,315
 


Less: accumulated depreciation
 
 
333,208
 
 
 
363,693
 


 
 
$
144,287
 
 
$
138,622
 

 Depreciation expense for the fiscal years ended March 31, 2024, 2023, and 2022, was $20,732, $21,567 and $34,089, respectively, which includes depreciation of assets under finance lease.
7.    GOODWILL AND OTHER INTANGIBLE ASSETSThe following is a summary of the changes in the carrying value of goodwill by reportable segment, for the fiscal years ended March 31, 2024 and 2023: 















 
 
 
 
 
 
 
 
Systems & Support
 


March 31, 2023
 
 
 
 
 
 
 
$
509,449
 


Effect of exchange rate changes
 
 
 
 
 
 
 
 
1,238
 


March 31, 2024
 
 
 
 
 
 
 
$
510,687
 

 















 
 
 
 
 
 
 
 
Systems & Support
 


March 31, 2022
 
 
 
 
 
 
 
$
513,722
 


Effect of exchange rate changes
 
 
 
 
 
 
 
 
(4,273
)


March 31, 2023
 
 
 
 
 
 
 
$
509,449
 

 As of March 31, 2024 and 2023, Interiors had gross goodwill of $475,302 and $475,302, respectively, which was fully impaired. Intangible AssetsThe components of intangible assets, net are as follows: 





















 
 
March 31, 2024
 


 
 
Weighted-Average Life(in Years)
 
 
Gross CarryingAmount
 
 
AccumulatedAmortization
 
 
Net
 


Customer relationships
 
 
18.6
 
 
 
154,885
 
 
 
(90,888
)
 
 
63,997
 


Product rights, technology and licenses
 
 
12.1
 
 
 
33,927
 
 
 
(32,934
)
 
 
993
 


Other
 
 
30.0
 
 
 
300
 
 
 
(227
)
 
 
73
 


Total intangibles, net
 
 
 
 
$
189,112
 
 
$
(124,049
)
 
$
65,063
 

 





















 
 
March 31, 2023
 


 
 
Weighted-Average Life(in Years)
 
 
Gross CarryingAmount
 
 
AccumulatedAmortization
 
 
Net
 


Customer relationships
 
 
18.6
 
 
 
154,679
 
 
 
(82,060
)
 
 
72,619
 


Product rights, technology and licenses
 
 
11.4
 
 
 
52,990
 
 
 
(51,794
)
 
 
1,196
 


Other
 
 
30.0
 
 
 
300
 
 
 
(217
)
 
 
83
 


Total intangibles, net
 
 
 
 
$
207,969
 
 
$
(134,071
)
 
$
73,898
 

 60
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Amortization expense for the fiscal years ended March 31, 2024, 2023, and 2022, was $8,893, $10,692, and $11,420, respectively. Amortization expense for the five fiscal years succeeding March 31, 2024, by year is expected to be as follows: 2025: $8,892; 2026: $8,892; 2027: $7,971; 2028: $7,304; 2029: $6,429, and thereafter: $25,575.
8.    ACCRUED EXPENSESAccrued expenses consist of the following items:  













 
 
March 31,
 


 
 
2024
 
 
2023
 


Accrued pension
 
$
757
 
 
$
768
 


Accrued other postretirement benefits
 
 
2,126
 
 
 
2,378
 


Accrued compensation and benefits
 
 
53,971
 
 
 
59,357
 


Accrued interest
 
 
4,021
 
 
 
9,848
 


Accrued warranties
 
 
13,537
 
 
 
13,084
 


Accrued workers' compensation
 
 
4,145
 
 
 
7,448
 


Accrued income tax
 
 
10,026
 
 
 
3,702
 


Accrued indemnification liability
 
 
7,338
 
 
 
—
 


Operating lease liabilities
 
 
2,833
 
 
 
3,182
 


Warrants
 
 
—
 
 
 
9,563
 


All other
 
 
31,101
 
 
 
32,349
 


Total accrued expenses
 
$
129,855
 
 
$
141,679
 


 
9.    LEASESThe components of lease expense for the year ended March 31, 2024, 2023, and 2022, are disclosed in the table below. 



















 
 
 
 
Year Ended March 31,
 


Lease Cost
 
Financial Statement Classification
 
2024
 
 
2023
 
 
 
2022
 


Operating lease cost
 
Cost of sales, Selling, general and administrative expense, or Income from discontinued operations
 
$
6,169
 
 
$
8,561
 
 
$
9,473
 


Variable lease cost
 
Cost of sales, Selling, general and administrative expense, or Income from discontinued operations
 
 
1,548
 
 
 
1,431
 
 
 
9,359
 


Financing Lease Cost:
 
 
 
 
 
 
 
 
 
 
 


Amortization of right-of-use assets
 
Depreciation and amortizationIncome from discontinued operations
 
 
2,661
 
 
 
2,760
 
 
 
3,785
 


Interest on lease liability
 
Interest expense and otherIncome from discontinued operations
 
 
1,388
 
 
 
1,377
 
 
 
1,590
 


Total lease cost (1)
 
 
 
$
11,766
 
 
$
14,129
 
 
$
24,207
 

 (1)Total lease cost does not include short-term leases or sublease income, both of which are immaterial.61
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Supplemental cash flow information for the years ended March 31, 2024, 2023, and 2022, including cash flow information for discontinued operations, is disclosed in the table below. 

















 
 
Year Ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Cash paid for amounts included in the measurement of lease liabilities
 
 
 
 
 
 
 
 
 


Operating cash flows used in operating leases
 
$
3,522
 
 
$
7,204
 
 
$
14,133
 


Operating cash flows used in finance leases
 
 
1,376
 
 
 
1,377
 
 
 
1,602
 


Financing cash flows used in finance leases
 
 
3,810
 
 
 
3,293
 
 
 
5,161
 


ROU assets obtained in exchange for lease liabilities
 
 
 
 
 
 
 
 
 


Operating leases
 
 
849
 
 
 
5,054
 
 
 
666
 


Finance leases
 
 
3,132
 
 
 
1,553
 
 
 
725
 

 Supplemental balance sheet information related to leases as of March 31, 2024 and 2023, is disclosed in the table below. 















 
 
 
 
March 31,
 


Leases
 
Classification
 
2024
 
 
2023
 


Assets
 
 
 
 
 
 
 
 


Operating lease ROU assets
 
Other, netAssets held for sale
 
$
14,438
 
 
$
17,135
 


 
 
 
 
 
 
 
 
 


Finance lease ROU assets, cost
 
Property and equipment, netAssets held for sale
 
 
32,712
 
 
 
33,978
 


Accumulated amortization
 
Property and equipment, netAssets held for sale
 
 
(23,668
)
 
 
(23,058
)


Finance lease ROU assets, net
 
 
 
 
9,044
 
 
 
10,920
 


Total lease assets
 
 
 
$
23,482
 
 
$
28,055
 


 
 
 
 
 
 
 
 
 


Liabilities
 
 
 
 
 
 
 
 


Current
 
 
 
 
 
 
 
 


Operating
 
Accrued expensesLiabilities related to assets held for sale
 
$
2,833
 
 
$
3,369
 


Finance
 
Current portion of long-term debt
 
 
2,934
 
 
 
3,162
 


Noncurrent
 
 
 
 
 
 
 
 


Operating
 
Other noncurrent liabilitiesLiabilities related to assets held for sale
 
 
13,643
 
 
 
14,639
 


Finance
 
Long-term debt, less current portion
 
 
11,074
 
 
 
11,654
 


Total lease liabilities
 
 
 
$
30,484
 
 
$
32,824
 

 Information related to lease terms and discount rates as of March 31, 2024 and 2023, is disclosed in the table below. 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Weighted average remaining lease term (years)
 
 
 
 
 
 


Operating leases
 
 
7.2
 
 
 
7.3
 


Finance leases
 
 
7.1
 
 
 
6.9
 


 
 
 
 
 
 
 


Weighted average discount rate
 
 
 
 
 
 


Operating leases
 
 
7.3
%
 
 
7.5
%


Finance leases
 
 
7.5
%
 
 
7.5
%

 62
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The maturity of the Company's lease liabilities as of March 31, 2024, is disclosed in the table below. 



















 
 
 
 
Operatingleases
 
 
Financeleases
 
 
Total
 


FY2025
 
 
 
$
4,002
 
 
$
3,546
 
 
$
7,548
 


FY2026
 
 
 
 
3,570
 
 
 
2,572
 
 
 
6,142
 


FY2027
 
 
 
 
3,409
 
 
 
2,471
 
 
 
5,880
 


FY2028
 
 
 
 
1,917
 
 
 
1,581
 
 
 
3,498
 


FY2029
 
 
 
 
1,384
 
 
 
1,670
 
 
 
3,054
 


Thereafter
 
 
 
 
7,070
 
 
 
4,855
 
 
 
11,925
 


Total lease payments
 
 
 
 
21,352
 
 
 
16,695
 
 
 
38,047
 


Less: Imputed interest
 
 
 
 
(4,876
)
 
 
(2,687
)
 
 
(7,563
)


Total lease liabilities
 
 
 
$
16,476
 
 
$
14,008
 
 
$
30,484
 


 
 
10.    LONG-TERM DEBTLong-term debt consists of the following: 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Finance leases
 
$
14,008
 
 
$
14,816
 


Senior secured first lien notes due 2028
 
 
1,078,890
 
 
 
1,200,000
 


Senior notes due 2025
 
 
—
 
 
 
499,024
 


Other notes
 
 
1,900
 
 
 
—
 


Less: debt issuance costs
 
 
(16,599
)
 
 
(22,058
)


 
 
 
1,078,199
 
 
 
1,691,782
 


Less: current portion
 
 
3,200
 
 
 
3,162
 


 
 
$
1,074,999
 
 
$
1,688,620
 

 Receivables Securitization ProgramIn connection with the Securitization Facility, the Company sells on a revolving basis certain eligible accounts receivable to Triumph Receivables, LLC, a wholly-owned special-purpose entity, which in turn sells a percentage ownership interest in the receivables to commercial paper conduits sponsored by financial institutions.  The Company is the servicer of the trade accounts receivable under the Securitization Facility.  Interest rates are based on the Bloomberg Short Term Bank Yield Index (“BSBY”), plus a 2.25% fee on the drawn portion and a fee ranging from 0.45% to 0.50% on the undrawn portion of the Securitization Facility. The drawn fee may be reduced to 2.00% depending on the credit rating of the Company. Collateralized letters of credit incur fees at a rate of 0.125%. The Company secures its trade accounts receivable, which are generally non-interest-bearing, in transactions that are accounted for as borrowings pursuant to ASC 860, Transfers and Servicing.  The Company has established a letter of credit facility under the Securitization Facility.  Under the provisions of the letter of credit facility, the Company may request the Securitization Facility’s administrator to issue one or more letters of credit that will expire no later than 12 months after the date of issuance, extension or renewal, as applicable.In December 2023, the Company amended the Securitization Facility, decreasing the purchase limit from $100,000 to $75,000, modifying certain other terms, and extending the term through December 2025. As of March 31, 2024, the maximum amount available under the Securitization Facility was $75,000. The actual amount available under the Securitization Facility at any point in time is dependent upon the balance of eligible accounts receivable as well as the amount of letters of credit outstanding. At March 31, 2024 and 2023, there were $0 in borrowings and $19,570 and $19,753, respectively, in letters of credit outstanding under the Securitization Facility, primarily to support insurance policies. The agreements governing the Securitization Facility contain restrictions and covenants, including limitations on the making of certain restricted payments; creation of certain liens; and certain corporate acts such as mergers, consolidations and the sale of all or substantially all the Company’s assets.  63
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Senior Secured First Lien Notes due 2028On March 14, 2023, the Company issued $1,200,000 principal amount of 9.000% Senior Secured First Lien Notes due March 15, 2028, pursuant to an indenture among the Company, the Guarantor Subsidiaries, and U.S. Bank National Association, as trustee (the “2028 First Lien Notes”). The 2028 First Lien Notes were sold at 100% of the principal amount and have an effective interest yield of 9.000%.  Interest is payable semi-annually in cash in arrears on March 15 and September 15 of each year, commencing on September 15, 2023. In the twelve months ended March 31, 2024, the Company recognized a gain of approximately $3,400 related to an adjustment to its deferred debt issuance costs, a portion of which related to fiscal 2023. The total issuance costs incurred in connection with the issuance of the 2028 First Lien Notes were approximately $23,000, which were deferred and are being amortized over the term of the 2028 First Lien Notes.The 2028 First Lien Notes and the guarantees are first lien secured obligations of the Company and the Guarantor Subsidiaries.  The 2028 First Lien Notes:(i)rank equally in right of payment to any future senior indebtedness of the Company and Guarantor Subsidiaries;(ii)are effectively senior to all future second lien obligations and all future unsecured indebtedness of the Company and the Guarantor Subsidiaries, but only to the extent of the value of the Collateral (as defined below), and after giving effect to any permitted additional first lien secured obligations and other permitted liens of senior or equal priority);(iii)are senior in right of payment to all future subordinated indebtedness of the Company and the Guarantor Subsidiaries;(iv)are secured by the Collateral on a pari passu basis with any future permitted additional first lien secured obligations, subject to the Collateral Trust Agreement;(v)are effectively subordinated to any existing and future obligations of the Company and the Guarantor Subsidiaries that are secured by assets that do not constitute the Collateral, in each case, to the extent of the value of the assets securing such obligations; and(vi)are structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s existing and future subsidiaries that do not guarantee the 2028 First Lien Notes, including the Securitization Facility.The 2028 First Lien Notes are guaranteed on a full, senior, joint and several basis by each of the Guarantor Subsidiaries.  In the future, each of the Company’s domestic restricted subsidiaries (other than any domestic restricted subsidiary that is a receivable subsidiary) that (1) is not an immaterial subsidiary, (2) becomes a borrower under any of its material debt facilities or (3) guarantees (a) any of the Company’s indebtedness or (b) any indebtedness of the Company’s domestic restricted subsidiaries, in the case of either (a) or (b), incurred under any of the Company’s material debt facilities, will guarantee the 2028 First Lien Notes. Under certain circumstances, the guarantees may be released without action by, or consent of, the holders of the 2028 First Lien Notes.The 2028 First Lien Notes and the guarantees are secured, subject to permitted liens, by first-priority liens on substantially all of the Company’s and the Guarantor Subsidiaries’ assets (including certain of the Company’s real estate assets), whether now owned or hereafter acquired, other than certain excluded property, which liens will secure permitted additional first lien obligations on a pari passu basis, subject to the Collateral Trust Agreement (the “Collateral”). Under certain circumstances, the Collateral may be released without action by, or the consent of, the holders of the 2028 First Lien Notes. The 2028 First Lien Notes and the guarantees will not be secured by the assets of Non-Guarantor Subsidiaries, which include the unrestricted subsidiaries to whom certain of the Company’s accounts receivables are and may in the future be sold to support borrowing under the Securitization Facility.A collateral trust agreement (the “Collateral Trust Agreement”) among the Company, the Guarantor Subsidiaries, the Collateral Trustee and U.S. Bank National Association, in its capacity as the trustee for the 2028 First Lien Notes, sets forth therein the relative rights with respect to the Collateral as among the trustee for the 2028 First Lien Notes and certain subsequent holders of first lien obligations and covering certain other matters relating to the administration of security interests. The Collateral Trust Agreement generally controls substantially all matters related to the Collateral, including with respect to decisions, distribution of proceeds or enforcement. Pursuant to the Collateral Trust Agreement, on the issue date of the 2028 First Lien Notes the Collateral Trustee will control certain matters related to the Collateral that the Collateral Trust Agreement specifies are in its discretion. If the Company incurs certain types of additional first lien obligations, the Controlling First Lien Holders (as defined in the Collateral Trust Agreement) will have the right to control decisions relating to the Collateral that are outside the Collateral Trustee’s discretion under the Collateral Trust Agreement and the 2028 Note holders may no longer be in control of such decisions.The Company may redeem the 2028 First Lien Notes, in whole or in part, at any time or from time to time on or after March 15, 2025, at specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date. At any time or from time to 64
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) time prior to March 15, 2025, the Company may redeem the 2028 First Lien Notes, in whole or in part, at a redemption price equal to 100% of their principal amount plus a make whole premium, together with accrued and unpaid interest, if any, to the redemption date. In addition, the Company may redeem up to 40% of the aggregate principal amount of the outstanding 2028 First Lien Notes prior to March 15, 2025, with the net cash proceeds from certain equity offerings at a redemption price equal to 109.000% of their principal amount, together with accrued and unpaid interest, if any, to the redemption date. The Company may redeem, at any time from time to time before March 15, 2025, up to 10% of the aggregate principal amount of the notes per annum, at a redemption price equal to 103% of the aggregate principal amount plus accrued and unpaid interest, if any, to the redemption date.If the Company experiences specific kinds of changes of control, the Company is required to offer to purchase all of the 2028 First Lien Notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.The 2028 First Lien Notes Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions; (iii) make other restricted payments and investments; (iv) create liens; (v) incur restrictions on the ability of restricted subsidiaries to pay dividends or make certain other payments; (vi) sell assets, including capital stock of restricted subsidiaries; (vii) enter into sale and leaseback transactions; (viii) merge or consolidate with other entities; and (ix) enter into transactions with affiliates. In addition, the 2028 First Lien Notes Indenture requires, among other things, the Company to provide financial and current reports to holders of the 2028 First Lien Notes or file such reports electronically with the SEC. These covenants are subject to a number of exceptions, limitations and qualifications set forth in the Indenture, as well as suspension periods in certain circumstances.In March 2024, using approximately $129,827 of the proceeds from the sale of Product Support, the Company redeemed $120,000 principal amount of 2028 First Lien Notes at a purchase price of 103% of the aggregate principal amount, plus accrued and unpaid interest and repurchased in an asset sale tender offer $1,110 principal amount of 2028 First Lien Notes at a purchase price of 100% of the aggregate principal amount, plus accrued and unpaid interest.  This redemption resulted in a debt extinguishment loss of approximately $5,463.Subsequent to March 31, 2024, on May 30, 2024, the Company redeemed $120,000 of our 2028 First Lien Notes at a redemption price equal to 103.000% of the principal amount redeemed plus accrued and unpaid interest to, but not including, the redemption date. Senior Notes Due 2025On August 17, 2017, the Company issued $500,000 principal amount of 7.750% Senior Notes due August 15, 2025 (the "2025 Notes").  In the year ended March 31, 2023, following the Warrants issuance on December 19, 2022, $976 in principal amount of 2025 Notes were used to pay the exercise price for approximately 0.1 million Warrants.  Resulting extinguishment losses from the write-off of deferred debt issuance costs in the year ended March 31, 2023, were immaterial.In the year ended March 31, 2024, approximately $13,404 in principal amount of the 2025 Notes were used to pay the exercise price for approximately 0.9 million Warrants.  In August 2023, the Company executed a 10b5-1 repurchase plan agreement with a third-party (the "Agent") granting the Agent the authority to repurchase on the open market up to $50,000 in principal amount of the 2025 Notes, subject to specific conditions, including daily volume and market prices.  Pursuant to this agreement, in the year ended March 31, 2024, the Company used approximately $48,062 to redeem $50,000 principal amount of the 2025 Notes.  In March 2024, using approximately $437,590 of the proceeds from the sale of Product Support, the Company redeemed the remaining outstanding $435,621 principal amount of 2025 Notes plus accrued and unpaid interest.  The extinguishment gains on these transactions totaled approximately $500.Senior Secured First Lien Notes due 2024 and Senior Secured Notes Due 2024During the year ended March 31, 2023, the Company sold intellectual property that required redemption of $19,340 of the outstanding principal balance and payment of a premium of approximately $1,287.  On March 14, 2023, the Company used $1,068,831 of the proceeds from the issuance of the 2028 First Lien Notes (i) to call all outstanding 2024 First Lien Notes, (ii) to acquire a portion of the 2024 Second Lien Notes that the Company had offered to purchase as part of a tender offer, and (iii) to redeem the balance of the 2024 Second Lien Notes that were not tendered in such tender offer.  The Company recognized additional net extinguishment losses of approximately $31,600 upon these redemptions and repurchases.65
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Financial Instruments Not Recorded at Fair ValueCarrying amounts and the related estimated fair values of the Company's long-term debt not recorded at fair value in the accompanying consolidated financial statements are as follows: 



















March 31, 2024
 
 
March 31, 2023
 


CarryingValue
 
 
FairValue
 
 
CarryingValue
 
 
FairValue
 


$
1,078,199
 
 
$
1,154,245
 
 
$
1,691,782
 
 
$
1,676,879
 

 The fair value of the long-term debt was calculated based on either interest rates available for debt with terms and maturities similar to the Company's existing debt arrangements or broker quotes on the Company's existing debt (Level 2 inputs).Interest paid on indebtedness during the fiscal years ended March 31, 2024, 2023, and 2022, amounted to $147,975, $138,464 and $137,922, respectively. The Company also made redemption premium payments of approximately $3,600, $26,157, and $9,108 in the years ended March 31, 2024, 2023, and 2022, respectively. As of March 31, 2024, the fiscal year maturities of long-term debt are as follows: 2025 — $3,200; 2026 — $2,838; 2027 — $2,737; 2028 — $1,080,737; 2029 — $1,936; and thereafter— $3,350 through 2036.
11.    OTHER NONCURRENT LIABILITIESOther noncurrent liabilities are composed of the following items: 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Acquired contract liabilities, net
 
$
6,601
 
 
$
9,845
 


Accrued warranties
 
 
3,374
 
 
 
4,551
 


Accrued workers' compensation
 
 
11,043
 
 
 
11,146
 


Noncurrent contract liabilities
 
 
9,500
 
 
 
463
 


Operating lease liabilities
 
 
13,643
 
 
 
14,573
 


Environmental contingencies
 
 
7,580
 
 
 
4,400
 


Income tax reserves
 
 
300
 
 
 
300
 


Multiemployer pension plan withdrawal liability
 
 
12,273
 
 
 
13,415
 


All other
 
 
4,207
 
 
 
1,295
 


Total other noncurrent liabilities
 
$
68,521
 
 
$
59,988
 


 
12.    INCOME TAXESThe components of (loss) income from continuing operations before income taxes are as follows: 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Foreign
 
$
38,002
 
 
$
513
 
 
$
46,457
 


Domestic
 
 
(65,346
)
 
 
75,264
 
 
 
(92,308
)


 
 
$
(27,344
)
 
$
75,777
 
 
$
(45,851
)

 66
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The components of income tax (benefit) expense are as follows: 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Current:
 
 
 
 
 
 
 
 
 


Federal
 
$
347
 
 
$
(538
)
 
$
—
 


State
 
 
527
 
 
 
175
 
 
 
(554
)


Foreign
 
 
6,249
 
 
 
3,709
 
 
 
5,055
 


 
 
 
7,123
 
 
 
3,346
 
 
 
4,501
 


Deferred:
 
 
 
 
 
 
 
 
 


Foreign
 
 
—
 
 
 
14
 
 
 
25
 


 
 
 
—
 
 
 
14
 
 
 
25
 


 
 
$
7,123
 
 
$
3,360
 
 
$
4,526
 

 A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows: 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Statutory federal income tax rate
 
 
21.0
%
 
 
21.0
%
 
 
21.0
%


State and local income taxes, net of federal tax benefit
 
 
10.0
 
 
 
10.6
 
 
 
17.3
 


Section 162(m)
 
 
(2.8
)
 
 
2.7
 
 
 
(4.2
)


Return to provision adjustment
 
 
30.2
 
 
 
(4.8
)
 
 
(0.4
)


Miscellaneous permanent items and nondeductible accruals
 
 
(1.0
)
 
 
0.3
 
 
 
(2.4
)


Research and development tax credit
 
 
9.0
 
 
 
(2.9
)
 
 
5.0
 


Impact of foreign operations (including rate differential, rate change, and settlement with tax authorities
 
 
8.6
 
 
 
3.1
 
 
 
13.8
 


Valuation allowance
 
 
(100.3
)
 
 
(25.9
)
 
 
(59.4
)


Other (including FIN 48)
 
 
(0.7
)
 
 
0.3
 
 
 
(0.6
)


Effective income tax rate
 
 
(26.0
)%
 
 
4.4
%
 
 
(9.9
)%

 The components of deferred tax assets and liabilities are as follows: 













 
 
March 31,
 


 
 
2024
 
 
2023
 


Deferred tax assets:
 
 
 
 
 
 


Net operating loss and other credit carryforwards
 
$
223,459
 
 
$
302,273
 


Inventory
 
 
17,328
 
 
 
23,584
 


Accruals and reserves
 
 
18,841
 
 
 
21,336
 


Interest carryforward
 
 
96,115
 
 
 
103,826
 


Pension and other postretirement benefits
 
 
69,828
 
 
 
87,846
 


Lease right-of-use assets
 
 
4,650
 
 
 
5,259
 


Research and development
 
 
9,283
 
 
 
4,592
 


Acquired contract liabilities, net
 
 
2,329
 
 
 
3,012
 


 
 
 
441,833
 
 
 
551,728
 


Valuation allowance
 
 
(399,179
)
 
 
(512,579
)


Net deferred tax assets
 
 
42,654
 
 
 
39,149
 


Deferred tax liabilities:
 
 
 
 
 
 


Deferred revenue
 
 
3,473
 
 
 
2,947
 


Property and equipment
 
 
10,632
 
 
 
11,487
 


Goodwill and other intangible assets
 
 
30,457
 
 
 
26,197
 


Lease liabilities
 
 
3,187
 
 
 
3,470
 


Prepaid expenses and other
 
 
2,173
 
 
 
2,316
 


 
 
 
49,922
 
 
 
46,417
 


Net deferred tax liabilities
 
$
7,268
 
 
$
7,268
 

 67
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The Company follows ASC 740, Income Taxes, which prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties, disclosure and transition.  The Company's policy is to release the tax effects from accumulated other comprehensive loss when all of the related assets or liabilities that gave rise to the accumulated other comprehensive loss (income) have been derecognized. The Company has elected to treat global intangible low-taxed income (“GILTI”) as a period expense.A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.Based on these criteria and the relative weighting of both the positive and negative evidence available and, in particular, the activity surrounding the Company's prior earnings history, including the forward losses and intangible impairments previously recognized, management determined that it was necessary to establish a valuation allowance against principally all of its net deferred tax assets. Given the objective verifiable negative evidence of a three-year cumulative loss and the weighting of all available positive evidence, the Company excluded projected taxable income (aside from reversing taxable temporary differences) from the assessment of income that could be used as a source of taxable income to realize the deferred tax assets.During fiscal year 2024, the Company adjusted the valuation allowance against the consolidated net deferred tax asset by $113,396 primarily due to utilization of net operating loss carryforwards, deduction of previously disallowed interest expense deductions, utilization of research and development credits previously carried forward, research and development cost amortization, and pension and other postretirement benefit plans. As of March 31, 2024, management determined that it was necessary to maintain a valuation allowance against principally all of its net deferred tax assets.As of March 31, 2024, the Company has net operating loss carryforwards of $181,848, $1,308,319, and $174,723 for U.S. federal, state, and foreign jurisdictions, respectively.  All Federal net operating losses have an indefinite carryforward period.  State net operating losses begin to expire in 2024, with a portion classified as indefinite.  Approximately $6,357 of foreign net operating losses begin to expire in 2027, and $168,366 have an indefinite carryforward period. The Company has been granted income tax holiday as an incentive to attract foreign investment by the Government of Thailand. The tax holidays continue to expire in various years through 2026. The Company does not have any other tax holidays in the jurisdictions in which it operates. The income tax benefit attributable to the tax status of our subsidiaries in Thailand was approximately $1,073 or $0.01 per diluted share in fiscal 2024, $583 or $0.01 per diluted share in fiscal 2023 and $415 or $0.01 per diluted share in fiscal 2022. In connection with the sale of the Company’s Product Support business, the company does not expect a benefit from this tax holiday program in future periods.At March 31, 2024, cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or foreign withholding taxes have been recorded is $148,871. As the Company currently intends to indefinitely reinvest all such earnings, no provision has been made for income taxes that may become payable upon distribution of such earnings, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability.The Company has classified uncertain tax positions as noncurrent income tax liabilities unless expected to be paid in one year.As of March 31, 2024 and 2023, the total amount of unrecognized tax benefits was $12,281 and $12,085, respectively, all of which would impact the effective rate, if recognized. The Company anticipates that total unrecognized tax benefits may be reduced by zero in the next 12 months. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations, or foreign income tax examinations by tax authorities, for fiscal years ended before March 31, 2014.68
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) As of March 31, 2024, the Company is not subject to any income tax examinations. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. There are no material interest and penalties accrued as of the year ended March 31, 2024. A reconciliation of the liability for uncertain tax positions, which are included in deferred taxes for the fiscal years ended March 31, 2024, 2023, and 2022 follows: 

















 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Beginning balance
 
$
12,193
 
 
$
11,978
 
 
$
11,750
 


Adjustments for tax positions related to the current year
 
 
371
 
 
 
223
 
 
 
228
 


Adjustments for tax positions of prior years
 
 
(348
)
 
 
(8
)
 
 
0
 


Ending balance
 
$
12,216
 
 
$
12,193
 
 
$
11,978
 


 
13. STOCKHOLDERS' DEFICITIn March 2022, the Company adopted a tax benefits preservation plan (the " Plan") designed to preserve Triumph’s ability to utilize its net operating loss carryforwards and other tax attributes (collectively, "Tax Benefits"). The Plan replaced a similar plan that was adopted in March 2019 and which expired in March 2022. The Company obtained stockholder approval for the Plan in July 2022 at its annual meeting of stockholders. Under the Plan, Triumph declared a dividend distribution of one right (a “Right”) for each share of its common stock outstanding at the close of business on March 21, 2022. The Plan will expire on March 13, 2025. The Rights also will expire: (i) if the Rights are redeemed or exchanged as provided in the Plan; (ii) if the Board determines that the Plan is no longer necessary or desirable for the preservation of the Tax Benefits; or (iii) if the Board determines that no Tax Benefits, once realized, as applicable, may be carried forward (in which case, the Rights will expire on the first date of the relevant taxable year for which such determination is made).Pursuant to the Plan, if a stockholder (or group) becomes a 4.9% stockholder without meeting certain customary exceptions, the Rights become exercisable and entitle stockholders (other than the 4.9% stockholder or group causing the rights to become exercisable) to purchase additional shares of Triumph at a significant discount, resulting in significant dilution in the economic interest and voting power of the 4.9% stockholder or group causing the Rights to become exercisable. Stockholders owning 4.9% or more of Triumph’s outstanding shares at the time the Plan was adopted were grandfathered and will only cause the Rights to distribute and become exercisable if they acquire an additional one percent or more of Triumph’s outstanding shares. Under the Plan, the Board has the ability to determine in its sole discretion that any person shall not be deemed an acquiring person and therefore that the Rights shall not become exercisable if such person becomes a 4.9% stockholder. The adoption of the Plan and the dividend distribution did not have an impact on the Company’s consolidated financial statements. In 2014, the Company's Board of Directors authorized an increase in the Company's existing stock repurchase program by up to 5,000,000 shares of its common stock in addition to the 500,800 shares authorized under prior authorizations. As of March 31, 2024, the Company remains able to purchase an additional 2,277,789 shares. Repurchases may be made from time to time in open market transactions, block purchases, privately negotiated transactions or otherwise at prevailing prices. No time limit has been set for completion of the program.The holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholders of Triumph.The Company has preferred stock of $0.01 par value, 250,000 shares authorized. At March 31, 2024 and 2023, zero shares of preferred stock were outstanding.69
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Accumulated Other Comprehensive LossChanges in accumulated other comprehensive loss ("AOCI") by component for the years ended March 31, 2024 and 2023, were as follows:





















 
 
CurrencyTranslationAdjustment
Unrealized Gainsand Losses onDerivativeInstruments
Defined BenefitPension Plansand OtherPostretirementBenefits
Total (1)
 


March 31, 2022
 
$
(47,933
)
 
$
(270
)
 
$
(415,151
)
 
$
(463,354
)


AOCI before reclassifications
 
 
(1,273
)
 
 
2,265
 
 
 
(113,232
)
 
 
(112,240
)


Amounts reclassified from AOCI
 
 
—
 
 
 
(778
)
 
 
21,726
 
(2)
 
20,948
 


Net current period OCI
 
 
(1,273
)
 
 
1,487
 
 
 
(91,506
)
 
 
(91,292
)


March 31, 2023
 
 
(49,206
)
 
 
1,217
 
 
 
(506,657
)
 
 
(554,646
)


AOCI before reclassifications
 
 
5,057
 
 
 
796
 
 
 
12,511
 
 
 
18,364
 


Amounts reclassified from AOCI
 
 
—
 
 
 
(1,944
)
 
 
21,157
 
(2)
 
19,213
 


Net current period OCI
 
 
5,057
 
 
 
(1,148
)
 
 
33,668
 
 
 
37,577
 


March 31, 2024
 
$
(44,149
)
 
$
69
 
 
$
(472,989
)
 
$
(517,069
)

(1)Net of tax.(2)Includes amortization of actuarial losses and recognized prior service (credits) costs, which are included in the net periodic benefit income
 
14.    EARNINGS (LOSS) PER SHAREThe calculation of basic earnings per share is based on (loss) income from continuing operations, income from discontinued operations, or net income (loss) divided by the weighted average number of common shares considered outstanding during the periods. The calculation of diluted earnings per share reflects the effect of all potentially dilutive securities (principally outstanding warrants and outstanding restricted stock units) and is based on (loss) income from continuing operations, income from discontinued operations, or net income (loss) divided by the diluted weighted average number of common shares considered outstanding during the periods. As disclosed in Note 2, the Warrants permitted the tendering of Designated Notes in payment of the exercise price. In computing diluted earnings per share, the Company applies the if-converted method to the warrants and such warrants are assumed to be exercised and the Designated Notes are assumed to be tendered unless tendering cash would be more advantageous to the warrant holder.  Interest (net of tax) on any Designated Notes assumed to be tendered is added back as an adjustment to the (loss) income from continuing operations numerator as the warrants are transactions related to continuing operations. The (loss) income from continuing operations numerator is also adjusted for any nondiscretionary adjustments based on income (net of tax) including, for example, warrant remeasurement gains and losses recognized in the period. If cash exercise is more advantageous, the Company applies the treasury stock method to the warrants when calculating diluted earnings per share. The following is a reconciliation between the weighted average outstanding shares used in the calculation of basic and diluted earnings per share: 70
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) 

















 
 
Year ended March 31,
 


 
 
(in thousands)
 


 
 
2024
 
 
2023
 
 
2022
 


Numerator:
 
 
 
 
 
 
 
 
 


Numerator for basic earnings per share:
 
 
 
 
 
 
 
 
 


(Loss) income from continuing operations
 
$
(34,467
)
 
$
72,417
 
 
$
(50,377
)


 
 
 
 
 
 
 
 
 
 


Effect of Dilutive Securities:
 
 
 
 
 
 
 
 
 


Warrants
 
 
—
 
 
 
(3,626
)
 
 
—
 


 
 
 
 
 
 
 
 
 
 


Numerators for diluted (loss) earnings per share:
 
 
 
 
 
 
 
 
 


(Loss) income from continuing operations available to common stockholders after assumed conversions
 
$
(34,467
)
 
$
68,791
 
 
$
(50,377
)


Income from discontinued operations, net of tax expense
 
 
546,851
 
 
 
17,176
 
 
 
7,619
 


Net income (loss) available to common stockholders after assumed conversions
 
$
512,384
 
 
$
85,967
 
 
$
(42,758
)


 
 
 
 
 
 
 
 
 
 


Denominator:
 
 
 
 
 
 
 
 
 


Denominator for basic earnings per share
 
 
 
 
 
 
 
 
 


Weighted average common shares outstanding - basic
 
 
74,149
 
 
 
65,021
 
 
 
64,538
 


 
 
 
 
 
 
 
 
 
 


Effect of Dilutive Securities:
 
 
 
 
 
 
 
 
 


Warrants
 
 
—
 
 
 
6,371
 
 
 
—
 


Restricted stock units
 
 
—
 
 
 
329
 
 
 
—
 


Dilutive potential common shares
 
 
—
 
 
 
6,700
 
 
 
—
 


Denominator for basic (loss) earnings per share
 
 
 
 
 
 
 
 
 


Weighted average common shares outstanding - diluted
 
 
74,149
 
 
 
71,721
 
 
 
64,538
 


 
 
 
 
 
 
 
 
 
 


(Loss) earnings per share:
 
 
 
 
 
 
 
 
 


Basic (loss) earnings per share - continuing operations
 
$
(0.46
)
 
$
1.12
 
 
$
(0.78
)


Basic earnings per share - discontinued operations
 
 
7.38
 
 
 
0.26
 
 
 
0.12
 


Basic earnings (loss) per share
 
$
6.92
 
 
$
1.38
 
 
$
(0.66
)


 
 
 
 
 
 
 
 
 
 


Diluted (loss) earnings per share - continuing operations
 
$
(0.46
)
 
$
0.96
 
 
$
(0.78
)


Diluted earnings per share - discontinued operations
 
 
7.38
 
 
 
0.24
 
 
 
0.12
 


Diluted earnings (loss) per share
 
$
6.92
 
 
$
1.20
 
 
$
(0.66
)

 For the fiscal years ended March 31, 2024, 2023, and 2022, the shares that could potentially dilute earnings per share in the future but were not included in diluted weighted average common shares outstanding because to do so would have been anti-dilutive were immaterial.
15.    EMPLOYEE BENEFIT PLANSDefined Contribution Pension PlanThe Company sponsors a defined contribution 401(k) plan, under which salaried and certain hourly employees may defer a portion of their compensation. Eligible participants may contribute to the plan up to the allowable amount as determined by the plan of their regular compensation before taxes. The Company generally matches contributions at a rate of 75% of the first 6% of compensation contributed by the participant. All contributions and Company matched contributions are invested at the direction of the employee in one or more investment options offered under the plan. Company matching contributions vest immediately and aggregated to $9,143, $9,329, and $2,998 for the fiscal years ended March 31, 2024, 2023, and 2022, respectively. Defined Benefit Pension and Other Postretirement Benefit PlansThe Company sponsors several defined benefit pension plans covering some of its employees. Most employees are ineligible to participate in the plans or have ceased to accrue additional benefits under the plans based upon their service to the Company or years of service accrued under the defined benefit pension plans. Benefits under the defined benefit plans are based on years of service and, for most non-represented employees, on average compensation for certain years. It is the Company's policy to fund at least the minimum amount required for all qualified plans, using actuarial cost methods and assumptions acceptable under applicable government regulations, by making payments into a separate trust. The Company has in the past contributed and may in the future contribute shares of its common stock to this separate trust which would reduce the cash contribution required by the Company.In addition to the defined benefit pension plans, the Company provides other postretirement benefits ("OPEB") in the form of certain healthcare benefits for eligible retired employees. Such benefits are unfunded as of March 31, 2024. No active employees are eligible for these benefits. The vast majority of eligible retirees receive a fixed-dollar benefit they can use to purchase 71
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) healthcare services.  A small number of eligible retirees receive traditional retiree medical benefits for which the Company pays all premiums. All retirees who are eligible for these traditional benefits are Medicare-eligible. Current plan documents reserve the right to amend or terminate the plans at any time, subject to applicable collective bargaining requirements for represented employees.   In accordance with the Compensation – Retirement Benefits topic of ASC 715, the Company has recognized the funded status of the benefit obligation as of March 31, 2024 and 2023, on the accompanying consolidated balance sheets. The funded status is measured as the difference between the fair value of the plans' assets and the pension benefit obligation or accumulated postretirement benefit obligation of the plan. The majority of the plan assets are publicly traded investments, which were valued based on the market price as of the measurement date. Investments that are not publicly traded were valued based on the estimated fair value of those investments based on the Company’s evaluation of data from fund managers and comparable market data or using the net asset value as a practical expedient.The following tables set forth the Company's consolidated defined benefit pension plans for its union and non-union employees as of March 31, 2024 and 2023, and the amounts recorded on the consolidated balance sheets at March 31, 2024 and 2023. Company contributions include amounts contributed directly to plan assets and indirectly as benefits paid from the Company's assets. Benefit payments reflect the total benefits paid from the plans and the Company's assets. Information on the plans includes both the domestic qualified and nonqualified plans and the foreign qualified plans. 













 
 
Pension Benefits
 


 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 


Change in projected benefit obligations
 
 
 
 
 
 


Projected benefit obligation at beginning of year
 
$
1,660,423
 
 
$
1,946,201
 


Service cost
 
 
408
 
 
 
638
 


Interest cost
 
 
80,492
 
 
 
65,069
 


Actuarial gain
 
 
(34,360
)
 
 
(185,210
)


Participant contributions
 
 
117
 
 
 
115
 


Benefits paid
 
 
(149,891
)
 
 
(163,614
)


Currency translation adjustment
 
 
591
 
 
 
(2,776
)


Projected benefit obligation at end of year
 
$
1,557,780
 
 
$
1,660,423
 


Accumulated benefit obligation at end of year
 
$
1,557,533
 
 
$
1,659,607
 


Assumptions used to determine benefit   obligations at end of year
 
 
 
 
 
 


Discount rate
 
5.09 - 5.38%
 
 
5.09 - 5.19%
 


Rate of compensation increase
 
3.93%
 
 
3.92%
 

  













 
 
Pension Benefits
 


 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 


Change in fair value of plan assets
 
 
 
 
 
 


Fair value of plan assets at beginning of year
 
$
1,306,456
 
 
$
1,649,241
 


Actual return on plan assets
 
 
82,565
 
 
 
(177,419
)


Participant contributions
 
 
117
 
 
 
115
 


Company contributions
 
 
40,239
 
 
 
1,100
 


Benefits paid
 
 
(149,890
)
 
 
(163,615
)


Currency translation adjustment
 
 
704
 
 
 
(2,966
)


Fair value of plan assets at end of year
 
$
1,280,191
 
 
$
1,306,456
 


Funded status (underfunded)
 
 
 
 
 
 


Funded status
 
$
(277,589
)
 
$
(353,967
)


Reconciliation of amounts recognized on the   consolidated balance sheets
 
 
 
 
 
 


Pension asset—noncurrent
 
$
5,953
 
 
$
5,124
 


Accrued benefit liability—current
 
 
(757
)
 
 
(768
)


Accrued benefit liability—noncurrent
 
 
(282,785
)
 
 
(358,323
)


Net amount recognized
 
$
(277,589
)
 
$
(353,967
)

 72
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) 





















 
 
Pension Benefits
 
 
Other Postretirement Benefits
 


 
 
Year ended March 31,
 
 
Year ended March 31,
 


 
 
2024
 
 
2023
 
 
2024
 
 
2023
 


Reconciliation of amounts recognized in   accumulated other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 


Prior service costs (credits)
 
$
1,254
 
 
$
1,356
 
 
$
(38,795
)
 
$
(43,900
)


Actuarial losses (gains)
 
 
714,855
 
 
 
756,664
 
 
 
(41,678
)
 
 
(45,347
)


Income tax (benefits) expenses related to above items
 
 
(204,132
)
 
 
(204,132
)
 
 
42,016
 
 
 
42,016
 


Unamortized benefit plan costs (gains)
 
$
511,977
 
 
$
553,888
 
 
$
(38,457
)
 
$
(47,231
)

 The components of net periodic benefit cost for fiscal years ended March 31, 2024, 2023, and 2022, are as follows: 

















 
 
Pension Benefits
 


 
 
Year Ended March 31,
 


 
 
2024
 
 
2023
 
 
2022
 


Components of net periodic pension   cost
 
 
 
 
 
 
 
 
 


Service cost
 
$
408
 
 
$
638
 
 
$
745
 


Interest cost
 
 
80,492
 
 
 
65,069
 
 
 
46,891
 


Expected return on plan assets
 
 
(105,039
)
 
 
(121,195
)
 
 
(133,540
)


Amortization of prior service cost
 
 
102
 
 
 
102
 
 
 
260
 


Amortization of net loss
 
 
30,099
 
 
 
30,859
 
 
 
38,407
 


Curtailment loss
 
 
—
 
 
 
—
 
 
 
16,024
 


Settlements
 
 
—
 
 
 
—
 
 
 
35,927
 


Special termination benefits
 
 
—
 
 
 
—
 
 
 
54
 


Total net periodic benefit expense (income)
 
$
6,062
 
 
$
(24,527
)
 
$
4,768
 


Assumptions used to determine net   periodic pension cost
 
 
 
 
 
 
 
 
 


Discount rate
 
5.09 - 5.19%
 
 
2.66% - 3.93%
 
 
1.75% - 3.47%
 


Expected long-term rate of return on plan assets
 
5.75 - 8.00%
 
 
5.75 - 8.00%
 
 
1.41 - 8.00%
 


Rate of compensation increase
 
 
3.92
%
 
3.50 - 4.22%
 
 
2.80 - 3.50%
 

 The Company recognized net periodic benefit income from its OPEB plan of approximately $8,934, $9,163, and $9,396 for the fiscal years ended March 31, 2024, 2023, and 2022, respectively.The discount rate is determined annually as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds. At the end of each year, the discount rate is primarily determined using the results of bond yield curve models based on a portfolio of high-quality bonds matching notional cash inflows with the expected benefit payments for each significant benefit plan.The expected return on plan assets is determined based on a market-related value of assets ("MRVA"), which is a smoothed asset value.  For fixed income securities, the MRVA is determined using the fair value of the fixed income assets.  For all other classes of pension assets, the MRVA is calculated by recognizing investment performance that is different from that expected on a straight-line basis over five years.  Actuarial gains and losses are amortized over the average remaining life expectancy of inactive participants for plans that are predominantly inactive and over the expected future service for active participants for other plans, but only to the extent unrecognized gains or losses exceed a corridor equal to 10% of the greater of the projected benefit obligation or market-related value of assets.The Company estimates the service and interest cost of its pension and OPEB plans by using the specific spot rates derived from the yield curve used to discount the cash flows reflected in the measurement of the benefit obligation.  The Company believes this approach provides a precise measurement of service and interest costs due to the correlation between projected benefit cash flows to the corresponding spot yield curve rates. During the fiscal year ended March 31, 2024, the Society of Actuaries did not release a new mortality projection scale, and therefore the mortality projection scale remains unchanged.  The Company elected to make no changes to the mortality assumptions due to the continued uncertainty of the impact of the COVID-19 pandemic on the long-term mortality rate. 73
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The projected benefit obligation assumptions impacting net actuarial gain consist of changes in discount and prescribed lump sum mortality rates, as well as changes to the deferred vested participation and commencement age assumptions.As required under ASC 715, the Company remeasures plan assets and obligations during an interim period whenever a significant event occurs that results in a material change in the net periodic pension cost. The determination of significance is based on judgment and consideration of events and circumstances impacting the pension costs.The following summarizes the key events whose effects on net periodic benefit cost and obligations are included in the tables above:•On March 21, 2022, the Company elected to purchase annuities and settle the pension obligations for approximately 2,500 retired participants in its qualified U.S. pension plan.  As a result of this transaction approximately $52,256 of plan assets and $51,418 of plan liabilities were transferred to the Nationwide Life and Annuity Insurance Company.  The settlement resulted in the recognition of prior noncash actuarial losses of approximately $32,116 in the year ended March 31, 2022.  The settlement's impact on the accompanying consolidated balance sheets was insignificant as the plan's assets were materially consistent with the settled pension obligation. •Effective August 31, 2021, the Company settled the fully-funded pension obligation it had retained subsequent to its fiscal year 2019 divestiture of Triumph Geared Solutions - Toronto.  The settlement resulted in the recognition of prior noncash actuarial losses of approximately $3,826 in the year ended March 31, 2022.  The settlement's impact on the accompanying consolidated balance sheets was insignificant as the plan's assets were materially consistent with the settled pension obligation. •Upon the completion of the sale of the composites and large structure manufacturing operations as disclosed in Note 3, the expected future service of certain defined benefit pension plan participants was curtailed and certain participants became eligible for subsidized early retirement benefits under the terms of the relevant plan.  As a result, the Company performed an interim remeasurement and recognized a onetime pension curtailment charge of approximately $16,024 which is presented in non-service defined benefit income on the accompanying consolidated statement of operations for year ended March 31, 2022.  Additionally, the Company accrued a Withdrawal Liability (as defined below), and recognized in non-serviced defined benefit income, of $14,644 as a result of the exit of its Spokane, Washington, composites manufacturing operations in the year ended March 31, 2023.  Refer to Note 17 for further information. Expected Pension Benefit PaymentsThe total estimated future benefit payments for the pension plans are expected to be paid from the plan assets and company funds. Estimated future benefit payments from plan assets and Company funds for the next ten fiscal years are as follows: 









Year
 
PensionBenefits
 


2025
 
$
155,839
 


2026
 
 
141,299
 


2027
 
 
137,467
 


2028
 
 
133,892
 


2029
 
 
129,551
 


2030 - 2034
 
 
588,180
 

  74
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) Plan Assets, Investment Policy and StrategyThe table below sets forth the Company's target asset allocation for fiscal 2024 and the actual asset allocations at March 31, 2024 and 2023. 















 
 
 
 
Actual Allocation
 


 
 
Target Allocation
 
March 31,
 


Asset Category
 
Fiscal 2024
 
2024
 
 
2023
 


Equity securities
 
50% - 60%
 
 
58
%
 
 
55
%


Fixed income securities
 
30% - 40%
 
 
31
 
 
 
34
 


Alternative investment funds
 
0% - 10%
 
 
10
 
 
 
10
 


Other
 
0% - 5%
 
 
1
 
 
 
1
 


Total
 
 
 
 
100
%
 
 
100
%

 Pension plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long-term. The investment goals are to exceed the assumed actuarial rate of return over the long-term within reasonable and prudent levels of risks and to meet future obligations.Asset/liability studies are conducted on a regular basis to provide guidance in setting investment goals for the pension portfolio and its asset allocation. The asset allocation aims to prudently achieve a strong, risk-adjusted return while seeking to minimize funding level volatility and improve the funded status of the plans. The pension plans currently employ a liability-driven investment ("LDI") approach, where assets and liabilities move in the same direction. The goal is to limit the volatility of the funding status and cover part, but not all, of the changes in liabilities. Most of the liabilities' changes are due to interest rate movements.To balance expected risk and return, allocation targets are established and monitored against acceptable ranges. All investment policies and procedures are designed to ensure that the plans' investments are in compliance with the Employee Retirement Income Security Act of 1974 ("ERISA"). Guidelines are established defining permitted investments within each asset class. Each investment manager has contractual guidelines to ensure that investments are made within the parameters of their asset class or in the case of multi-asset class managers, the parameters of their multi-asset class strategy. Certain investments are not permitted at any time, including investment directly in employer securities and uncovered short sales.75
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The tables below provide the fair values of the Company's plan assets at March 31, 2024 and 2023, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category (refer to Note 2 for definition of levels). 





















 
March 31, 2024
 


 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 


Assets
 
 
 
 
 
 
 
 
 
 
 
 


Cash and cash equivalents
 
$
18,974
 
 
$
—
 
 
$
—
 
 
$
18,974
 


Equity securities
 
 
 
 
 
 
 
 
 
 
 
 


International
 
 
107,551
 
 
 
—
 
 
 
—
 
 
 
107,551
 


U.S. equity
 
 
10,012
 
 
 
—
 
 
 
—
 
 
 
10,012
 


U.S. commingled fund
 
 
438,146
 
 
 
—
 
 
 
—
 
 
 
438,146
 


International commingled fund
 
 
30,618
 
 
 
—
 
 
 
—
 
 
 
30,618
 


Fixed income securities
 
 
 
 
 
 
 
 
 
 
 
 


Corporate bonds
 
 
—
 
 
 
13,025
 
 
 
—
 
 
 
13,025
 


Government securities
 
 
—
 
 
 
336,706
 
 
 
—
 
 
 
336,706
 


Other
 
 
 
 
 
 
 
 
 
 
 
 


Insurance contracts
 
 
—
 
 
 
—
 
 
 
613
 
 
 
613
 


Total investment in securities—assets
 
$
605,301
 
 
$
349,731
 
 
$
613
 
 
$
955,645
 


U.S. equity commingled fund
 
 
 
 
 
 
 
 
 
 
 
17,729
 


International equity commingled fund
 
 
 
 
 
 
 
 
 
 
 
133,851
 


U.S. fixed income commingled fund
 
 
 
 
 
 
 
 
 
 
 
34,098
 


International fixed income commingled fund
 
 
 
 
 
 
 
 
 
 
 
2,070
 


Government securities commingled fund
 
 
 
 
 
 
 
 
 
 
 
8,760
 


Private equity and infrastructure
 
 
 
 
 
 
 
 
 
 
 
126,351
 


Other
 
 
 
 
 
 
 
 
 
 
 
60
 


Total investment measured at NAV as a   practical expedient
 
 
 
 
 
 
 
 
 
 
$
322,919
 


Receivables
 
 
 
 
 
 
 
 
 
 
 
2,462
 


Payables
 
 
 
 
 
 
 
 
 
 
 
(835
)


Total plan assets
 
 
 
 
 
 
 
 
 
 
$
1,280,191
 

 76
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data)  





















 
 
March 31, 2023
 


 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 


Assets
 
 
 
 
 
 
 
 
 
 
 
 


Cash and cash equivalents
 
$
17,163
 
 
$
—
 
 
$
—
 
 
$
17,163
 


Equity securities
 
 
 
 
 
 
 
 
 
 
 
 


International
 
 
100,370
 
 
 
—
 
 
 
—
 
 
 
100,370
 


U.S. equity
 
 
3,190
 
 
 
—
 
 
 
—
 
 
 
3,190
 


U.S. commingled fund
 
 
417,307
 
 
 
—
 
 
 
—
 
 
 
417,307
 


International commingled fund
 
 
30,977
 
 
 
—
 
 
 
—
 
 
 
30,977
 


Fixed income securities
 
 
 
 
 
 
 
 
 
 
 
 


Corporate bonds
 
 
—
 
 
 
12,904
 
 
 
—
 
 
 
12,904
 


Government securities
 
 
—
 
 
 
361,070
 
 
 
—
 
 
 
361,070
 


Other
 
 
 
 
 
 
 
 
 
 
 
 


Insurance contracts
 
 
—
 
 
 
—
 
 
 
626
 
 
 
626
 


Total investment in securities—assets
 
$
569,007
 
 
$
373,974
 
 
$
626
 
 
$
943,607
 


U.S. equity commingled fund
 
 
 
 
 
 
 
 
 
 
 
2,866
 


International equity commingled fund
 
 
 
 
 
 
 
 
 
 
 
161,458
 


U.S. fixed income commingled fund
 
 
 
 
 
 
 
 
 
 
 
44,861
 


International fixed income commingled fund
 
 
 
 
 
 
 
 
 
 
 
7,070
 


Government securities commingled fund
 
 
 
 
 
 
 
 
 
 
 
14,599
 


Private equity and infrastructure
 
 
 
 
 
 
 
 
 
 
 
126,549
 


Other
 
 
 
 
 
 
 
 
 
 
 
3,592
 


Total investment measured at NAV as a   practical expedient
 
 
 
 
 
 
 
 
 
 
$
360,995
 


Receivables
 
 
 
 
 
 
 
 
 
 
 
2,288
 


Payables
 
 
 
 
 
 
 
 
 
 
 
(434
)


Total plan assets
 
 
 
 
 
 
 
 
 
 
$
1,306,456
 

 Cash equivalents and other short-term investments are primarily held in registered short-term investment vehicles which are valued using a market approach based on quoted market prices of similar instruments.Public equity securities, including common stock, are primarily valued using a market approach based on the closing fair market prices of identical instruments in the principal market on which they are traded. Commingled funds that are open-ended mutual funds for which the fair value per share is determined and published by the respective mutual fund sponsor and is the basis for current observable transactions are categorized as Level 1 fair value measures.Investments in commingled funds and private equity and infrastructure funds are carried at net asset value ("NAV") as a practical expedient to estimate fair value. The NAV is the total value of the fund divided by the number of shares outstanding. Adjustments to NAV, if any, are determined based on evaluation of data provided by fund managers, including valuation of the underlying investments derived using inputs such as cost, operating results, discounted future cash flows and market-based comparable data. In accordance with ASC 820-10, investments that are measured at NAV practical expedient are not classified in the fair value hierarchy; however, their fair value amounts are presented in these tables to permit reconciliation of the fair value hierarchy to the total plan assets disclosed in this footnote.Corporate, government agency bonds and mortgage-backed securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported observable trades for identical or comparable instruments.Other investments include insurance contracts primarily valued based on estimates of the premium required to acquire similar insurance contracts using market-based comparable data.Assumptions and Sensitivities77
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) The discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.The effect of a 25 basis-point change in discount rates as of March 31, 2024, is shown below: 









 
 
PensionBenefits
 


Increase of 25 basis points
 
 
 


Obligation
*
$
(31,238
)


Net periodic expense
 
 
140
 


Decrease of 25 basis points
 
 
 


Obligation
*
$
32,433
 


Net periodic expense
 
 
(165
)

* Excludes impact to plan assets due to the LDI investment approach discussed above under "Plan Assets, Investment Policy and Strategy."The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide for the benefits included in the benefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses and the potential to outperform market index returns. For fiscal 2025, the expected long-term rate of return is 5.5% - 8.00%.Anticipated Contributions to Defined Benefit In the year ended March 31, 2024, the Company contributed 3,200,000 shares of common stock to the separate pension plan trust with an aggregate contribution value of approximately $39,136 on the contribution date.  The Company expects to contribute approximately $23,000 to its qualified U.S. defined benefit pension plans during fiscal 2025.  No plan assets are expected to be returned to the Company in fiscal 2025.
 
16. STOCK COMPENSATION PLANSThe Company has stock incentive plans under which employees and non-employee directors may be granted equity awards in the form of stock options with an exercise price equal to the fair value of the Company’s stock on the grant date or in the form of restricted stock or restricted stock units that vest pursuant to service conditions and, in some cases, performance and/or market conditions.  The stock incentive and compensation plans under which outstanding equity awards have been granted to employees, officers, and non-employee directors are the Triumph Group 2018 Equity Plan (the "2018 Plan"), the Triumph Group 2013 Equity and Cash Incentive Plan (the “2013 Plan”), the 2016 Directors’ Equity Compensation Plan, as amended (the “Directors’ Plan”), and the Amended and Restated Directors’ Stock Incentive Plan (the “Prior Directors’ Plan”). The Prior Directors’ Plan expired by its terms during fiscal 2017.  The current stock incentive and compensation plans used for future awards are the 2018 Plan and the Directors’ Plan. New grants under the 2013 Plan ceased upon the approval of the 2018 Plan in fiscal 2019, and the 2013 Plan expired by its terms during fiscal 2024. The 2018 Plan and the Directors’ Plan are collectively referred to in this note as the plans.Management and the compensation committee have utilized restricted stock units as its primary form of share-based incentive compensation. Restricted stock units that vest solely pursuant to service conditions generally vest on a graded basis over a three year period and are subject to forfeiture should the grantee’s employment be terminated prior to an applicable vesting date.  Management and the compensation committee have also granted restricted stock units, referred to herein as performance restricted stock units, that vest pursuant to a combination of service conditions as well as market and performance conditions.  Such awards generally vest, subject to specific market and/or performance conditions, on a cliff vesting basis at the end of a three year performance period. The market and performance conditions may result in the awards vesting below target, including zero vesting awards if certain threshold vesting conditions are not met, or up to 300% of the number of awards granted, if certain vesting conditions are exceeded. The share-based payment expense arising from restricted stock unit expense is included in capital in excess of par value. The fair value of restricted stock units awards subject only to service conditions or service and performance conditions is determined by the product of the number of shares granted and the grant date market price of the Company's common stock, adjusted for material non-public information that the Company may be aware of as of the grant date, if any. The fair value of restricted stock units awards that contain market conditions is determined by the product of the number of shares granted and the grant date fair value of such an award value using a Monte Carlo valuation methodology.  The fair value of 78
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) share-based compensation granted to employees was $11,775, $13,728, and $14,129 during the fiscal years ended March 31, 2024, 2023, and 2022, respectively. The fair value of restricted stock unit awards is expensed on a straight-line basis over the requisite service period which is typically the vesting period.  The Company recognized $9,445, $8,913 and $9,782 of share-based compensation expense during the fiscal years ended March 31, 2024, 2023, and 2022, respectively. The Company has classified share-based compensation within selling, general and administrative expenses to correspond with the same line item as the majority of the cash compensation paid to the employees receiving share-based compensation.  At March 31, 2024 and 2023, 1,653,843 shares and 979,855 shares of common stock, respectively, were available for issuance under the plans. A summary of the status of the Company's non-vested restricted stock units as of March 31, 2024, and changes during the fiscal year ended March 31, 2024, is presented below. 













 
 
Shares
 
 
Weighted-Average GrantDate Fair Value
 


Non-vested restricted stock units at March 31, 2023
 
 
1,513,196
 
 
$
16.01
 


Granted
 
 
1,019,300
 
 
 
11.55
 


Vested
 
 
(489,342
)
 
 
13.73
 


Forfeited
 
 
(98,143
)
 
 
13.31
 


Non-vested restricted stock units at March 31, 2024
 
 
1,945,011
 
 
$
14.38
 

 The fair value of employee restricted stock units which vested during fiscal 2024, 2023 and 2022 was $6,718, $9,247, and $7,453, respectively. Expected future compensation expense on restricted stock units, net of expected forfeitures, is approximately $5,227, which is expected to be recognized over the remaining weighted average vesting period of approximately 1.5 years.
17.    COMMITMENTS AND CONTINGENCIESEnvironmental MattersCertain of the Company's current or former operations and facilities are subject to a number of federal, state, local and foreign environmental laws and regulations. In August 2023, a panel of three arbitrators made an interim decision in an ongoing arbitration between Triumph Aerostructures, LLC (“TAS”), a wholly owned subsidiary of the Company, and Northrop Grumman Systems Corporation (“Northrop”) related to ongoing future responsibility for environmental remediation costs at four formerly occupied properties that had been previously operated by Northrop. Although the interim decision indicated that TAS would have certain ongoing responsibility for remediation at the properties, neither the agreement nor the interim decision provides a mechanism for the transfer of remediation responsibilities to TAS.  While the parties continue to dispute liability for remediation, from a regulatory perspective, TAS is not a party to any regulatory order for three of the four properties, although TAS, along with Northrop, is party to the regulatory order for the fourth property. Approximately $1,300 has been accrued as a legal judgment loss and is management's best estimate of the remediation costs at the fourth property.  While final resolution of this matter remains uncertain, the ultimate impact on operations could be in the range of a loss of up to $39,000, with such loss resulting in annual cash expenditures not likely to exceed $2,000 to $3,000 in a given year.In March 2024, the panel of arbitrators made a second interim decision in the arbitration between TAS and Northrop indicating that although TAS had responsibility for certain remediation costs at the four formerly occupied properties that had been already incurred by Northrop, the panel was unable to affix an amount of damages to Northrop for those costs and asked the parties to meet and confer regarding those damages.  Northrop had indicated during the second phase of the arbitration that it believed its damages incurred through December 31, 2023 to be approximately $12,000, however, Northrop did not substantiate its damages.  TAS maintains that Northrop has not proven its damages after opportunity to do so in the second phase of the arbitration.  The Company has accrued a liability of approximately $6,000 as a result of the second interim decision which is included within legal contingencies loss on the accompanying consolidated statement of operations for the year ended March 31, 2024.It is anticipated that further action by the panel will occur in fiscal 2025.  TAS intends to vigorously defend itself in this matter, including potentially seeking to set aside any adverse decision from the arbitration panel. Commercial Disputes and LitigationThroughout the course of the Company’s programs, disputes with suppliers or customers could and have arisen regarding unique contractual requirements, quality, costs or impacts to production schedules.  If the Company is unable to successfully and 79
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) equitably resolve such claims and assertions, its business, financial condition, results of operations, customer relationships and related transactions could be materially adversely affected.In the ordinary course of business, the Company is involved in other disputes, claims and lawsuits with employees, suppliers and customers, as well as governmental and regulatory inquiries, that it deems to be immaterial. Some may involve claims or potential claims of substantial damages, fines, penalties or injunctive relief. While the Company cannot predict the outcome of any pending or future litigation or proceeding and no assurances can be given, the Company does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations. Divestitures, Disposals, Guarantees, and IndemnificationsAs disclosed in Note 3, we have engaged in a number of divestitures. In connection with divestitures and related transactions, the Company from time to time has indemnified and has been indemnified by third parties against certain liabilities that may arise in connection with, among other things, business activities prior to the completion of the respective transactions. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite.  As of March 31, 2024, no indemnification assets or liabilities have been recorded. As it relates to certain divestitures, disputes have arisen or may continue to arise between the Company and the acquirer subsequent to the completion and closing of the divestiture transaction. Such disputes have included or may include amounts payable to or from the buyer for closing working capital adjustments to the purchase price as well as claims regarding alleged violations of contractual terms, representations, and warranties of the sale agreements, among other matters.  The outcome of such disputes typically involve negotiations between the Company and the acquirer, but could also lead to litigation between the parties, including as disclosed further below, and the ultimate claims made by the parties against each other could be material.  As of March 31, 2024, we have accrued for our estimate of probable losses associated with such disputes, but losses in excess of those currently accrued could be incurred and may be material. The Company has received notification of claims which allege certain bases for indemnification and damages relating to certain divestitures. The relevant agreements generally contain limits on certain damages that may be payable under the relevant agreements. For example, the divestiture agreement relating to the sale of the Red Oak facility specified that representations and warranties insurance would be the sole and exclusive remedy for breach of representations and warranties except in the case of fraud.  By way of further example, the divestiture agreement relating to the sale of the Stuart facility contains an $18,750 general cap on breaches of representations (other than certain specified representations) and a $25,000 cap on breaches of certain specified representations related to contracts and product warranties, in each case absent certain circumstances, including fraud or breaches of fundamental or tax representations.  As disclosed in Note 3, on June 16, 2023, the Company entered into a settlement agreement with the buyer of the Stuart facility resolving a working capital dispute with the buyer resulting in an amount of $2,400 payable to the Company and resolving claims by the buyer related to the accounts payable representation and warranty under the purchase agreement resulting in an amount of $9,200 payable to the buyer, with such amount applicable to the general cap referred to above. The amounts were settled on a net basis by the Company paying $6,800 to the buyer. The purchaser of the Stuart facility also commenced litigation against the Company on December 12, 2023, seeking additional indemnification for damages claimed to be approximately $130,000 for losses allegedly arising from the knowing breach of certain representations and warranties regarding the financial condition of TAS and the products manufactured by TAS and alleged failures to disclose known and widespread paint issues and certain supplier and production issues at the facility prior to the closing.  While the Company cannot predict the outcome of any pending or future litigation, proceeding, or claim and no assurances can be given, the Company intends to vigorously defend claims brought against it and does not believe that any pending matter will have a material effect, individually or in the aggregate, on its financial position or results of operations.  If the Company is unable to successfully and equitably resolve such claims and assertions, its business, financial condition, and results of operations could be materially adversely affected. Additionally, in connection with certain divestitures, the Company has obtained customer consent to assign specified long-term contracts to the acquirer of the divested business by entering into consent-to-assignment agreements among the customer, the acquirer, and the Company.  Pursuant to certain of these agreements, the Company remains a co-obligor under the contract pursuant to guarantee agreements with the customer that predate the divestiture transaction.  The term of these obligations typically covers a period of 2 to 5 years from the date of divestiture.  There is no limitation to the maximum potential future liabilities under these contracts; however, the Company is typically indemnified by acquirers against such losses that may arise from the acquirers’ failure to perform under the assigned contracts.  As of March 31, 2024, no related indemnification assets or liabilities or guarantee liabilities have been recorded, and the Company has not been called upon to act as co-obligor under such arrangements through that date.  Also, in connection with certain divestitures, the Company has assigned lease facility agreements to the acquirers and entered into agreements to act as a co-obligor under the lease agreement in the event of non-performance under the lease by the assignee.  The Company is generally indemnified by the assignee or other third party to the 80
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) transaction.  On May 2, 2023, the Company received a letter from a lessor associated with one such transaction to assert the lessor’s rights against the Company as guarantor. The lease payment associated with the lease is approximately $130 per month over a lease term ending December 31, 2031, although the landlord has acknowledged its duty to mitigate damages by re-leasing the property.  The Company expects to be fully indemnified for any amounts payable under such guarantee.As the Company has completed the disposal of certain facilities, it may be exposed to additional costs such as environmental remediation obligations, lease termination costs, or customer or supplier claims which may have a material effect on its financial position or results of operations when such matters arise and a reasonable estimate of the costs can be made.  For example, in the year ended March 31, 2023, the Company withdrew from the IAM National Pension Fund (the “Fund), which is a multiemployer pension plan to which the Company previously contributed on behalf of certain of its represented employees.  Such withdrawal occurred as part of the Company’s exit of its Spokane, Washington, composites manufacturing operations.  In April 2023, the Company received a letter from the Fund confirming the Company’s complete withdrawal from the Fund and indicating that the Company’s portion of the unfunded vested benefits (the “Withdrawal Liability”) was estimated to be approximately $14,644, payable in quarterly installments of approximately $400 over a period of approximately thirteen years.  The Withdrawal Liability is subject to further adjustment based on the finalization of the Fund’s actuarial valuation for the plan year ending December 31, 2021, (i.e., the applicable plan year preceding the date of the Company’s withdrawal).  As of March 31, 2024, the Company's liability for this obligation on the accompanying consolidated balance sheet is approximately $13,912, representing its estimate of the remaining obligation before interest based on the letter received from the Fund. The Company is in the process of reviewing and responding to the withdrawal liability assessment, and it is possible the Withdrawal Liability could be reduced during that process.
 
18.    CUSTOMER CONCENTRATIONTrade and other receivables from The Boeing Company ("Boeing") represented approximately 14% and 13% of total trade and other receivables as of March 31, 2024 and 2023, respectively. Trade and other receivables from Daher Aerospace Inc. ("Daher") include receivables that largely correspond with payables associated with transition services and represented approximately 20% as of March 31, 2023. The Company had no other significant concentrations of credit risk.Sales to Boeing for fiscal 2024 were $279,956, or 23% of net sales, of which $168,038 and $111,918 were from Systems & Support and Interiors, respectively. Sales to Boeing for fiscal 2023 were $259,343, or 23% of net sales, of which $154,404 and $104,939 were from Systems & Support and Interiors, respectively. Sales to Boeing for fiscal 2022 were $464,043, or 37% of net sales, of which $130,123 and $333,920 were from Systems & Support and Interiors, respectively.No other single customer accounted for more than 10% of the Company's net sales; however, the loss of any significant customer, including Boeing, could have a material adverse effect on the Company and its operating subsidiaries.The Company currently generates a majority of its revenue from clients in the commercial aerospace industry and the military. The Company's growth and financial results are largely dependent on continued demand for its products and services from clients in these industries. When these industries experience a downturn, it is possible that customers in these sectors may conduct less business with the Company.
19.    COLLECTIVE BARGAINING AGREEMENTSApproximately 10% of the Company's labor force is covered under collective bargaining agreements. As of March 31, 2024, none of the Company's collectively bargained workforce is working under contracts that have expired, and 55% of the Company’s collectively bargained workforce are working under contracts that are set to expire within one year.
81

Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) 
20. SEGMENTSThe Company reports financial performance based on the following two reportable segments: Systems & Support and Interiors. The Company’s reportable segments are aligned with how the business is managed, and the Company's views of the markets it serves. The Chief Operating Decision Maker (the "CODM") evaluates performance and allocates resources based upon review of segment information. The CODM utilizes earnings before interest, income taxes, consideration payable to customer related to divestiture, depreciation and amortization, and pension (“Adjusted EBITDAP”) as a primary measure of segment profitability to evaluate the performance of its segments and allocate resources.Segment Adjusted EBITDAP is total segment revenue reduced by operating expenses (less depreciation and amortization) identifiable with that segment. Corporate includes general corporate administrative costs and any other costs not identifiable with one of the Company’s segments.The Company does not accumulate net sales information by product or service or groups of similar products and services, and therefore the Company does not disclose net sales by product or service because to do so would be impracticable.Selected financial information for each reportable segment is as follows:

























 
 
Year Ended March 31, 2024
 


 
 
Total
 
 
Corporate &Eliminations
 
 
Systems &Support
 
 
Interiors
 
 
Discontinued Operations
 


Net sales to external customers
 
$
1,192,043
 
 
$
—
 
 
$
1,027,630
 
 
$
164,413
 
 
$
—
 


Intersegment sales (eliminated in consolidation)
 
 
—
 
 
 
(822
)
 
 
795
 
 
 
27
 
 
 
—
 


Segment profit and reconciliation to consolidated income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


     Adjusted EBITDAP
 
 
195,074
 
 
 
—
 
 
 
200,074
 
 
 
(5,000
)
 
 
—
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Reconciliation of segment profit to loss before income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
 
(29,625
)
 
 
(1,847
)
 
 
(25,273
)
 
 
(2,505
)
 
 
—
 


Interest expense and other, net
 
 
(123,021
)
 
 
 
 
 
 
 
 
 
 
 
 


Corporate expenses
 
 
(52,725
)
 
 
 
 
 
 
 
 
 
 
 
 


Share-based compensation expense
 
 
(9,445
)
 
 
 
 
 
 
 
 
 
 
 
 


Loss on sale of assets and businesses
 
 
(12,208
)
 
 
 
 
 
 
 
 
 
 
 
 


Amortization of acquired contract liabilities
 
 
2,721
 
 
 
 
 
 
 
 
 
 
 
 
 


Non-service defined benefit income
 
 
2,372
 
 
 
 
 
 
 
 
 
 
 
 
 


Legal judgment loss
 
 
(7,338
)
 
 
 
 
 
 
 
 
 
 
 
 


Debt modification and extinguishment loss
 
 
(1,694
)
 
 
 
 
 
 
 
 
 
 
 
 


Warrant remeasurement gain, net
 
 
8,545
 
 
 
 
 
 
 
 
 
 
 
 
 


Loss from continuing operations before income taxes
 
 
(27,344
)
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Total capital expenditures
 
$
21,827
 
 
$
2,089
 
 
$
15,990
 
 
$
1,928
 
 
$
1,820
 


Total assets
 
$
1,686,270
 
 
$
361,348
 
 
$
1,224,895
 
 
$
100,027
 
 
$
—
 

 82
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data)  

























 
 
Year Ended March 31, 2023
 


 
 
Total
 
 
Corporate &Eliminations
 
 
Systems &Support
 
 
Interiors
 
 
Discontinued Operations
 


Net sales to external customers
 
$
1,130,562
 
 
$
—
 
 
$
918,960
 
 
$
211,602
 
 
$
—
 


Intersegment sales (eliminated in consolidation)
 
 
—
 
 
 
(436
)
 
 
391
 
 
 
45
 
 
 
—
 


Segment profit and reconciliation to consolidated income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


     Adjusted EBITDAP
 
 
204,352
 
 
 
—
 
 
 
172,415
 
 
 
31,937
 
 
 
—
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Reconciliation of segment profit to  before income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
 
(32,259
)
 
 
(2,116
)
 
 
(26,460
)
 
 
(3,683
)
 
 
—
 


Interest expense and other, net
 
 
(115,211
)
 
 
 
 
 
 
 
 
 
 
 
 


Corporate expenses
 
 
(54,333
)
 
 
 
 
 
 
 
 
 
 
 
 


Share-based compensation expense
 
 
(8,913
)
 
 
 
 
 
 
 
 
 
 
 
 


Gain on sale of assets and businesses
 
 
101,523
 
 
 
 
 
 
 
 
 
 
 
 
 


Amortization of acquired contract liabilities
 
 
2,500
 
 
 
 
 
 
 
 
 
 
 
 
 


Non-service defined benefit income
 
 
19,664
 
 
 
 
 
 
 
 
 
 
 
 
 


Consideration payable to customer related to divestiture
 
 
(17,185
)
 
 
 
 
 
 
 
 
 
 
 
 


Debt extinguishment loss
 
 
(33,044
)
 
 
 
 
 
 
 
 
 
 
 
 


Warrant remeasurement gain, net
 
 
8,683
 
 
 
 
 
 
 
 
 
 
 
 
 


Income from continuing operations before income taxes
 
 
75,777
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Total capital expenditures
 
$
20,676
 
 
$
1,114
 
 
$
15,154
 
 
$
1,514
 
 
$
2,894
 


Total assets
 
$
1,714,844
 
 
$
191,635
 
 
$
1,217,449
 
 
$
134,998
 
 
$
170,762
 

 

























 
 
Year Ended March 31, 2022
 


 
 
Total
 
 
Corporate &Eliminations
 
 
Systems &Support
 
 
Interiors
 
 
Discontinued Operations
 


Net sales to external customers
 
$
1,262,704
 
 
$
—
 
 
$
833,175
 
 
$
429,529
 
 
$
—
 


Intersegment sales (eliminated in consolidation)
 
 
—
 
 
 
(473
)
 
 
455
 
 
 
18
 
 
 
—
 


Segment profit and reconciliation to consolidated income before income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


     Adjusted EBITDAP
 
 
185,336
 
 
 
—
 
 
 
155,132
 
 
 
30,204
 
 
 
—
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Reconciliation of segment profit to  before income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Depreciation and amortization
 
 
(45,509
)
 
 
(3,245
)
 
 
(28,338
)
 
 
(13,926
)
 
 
—
 


Interest expense and other, net
 
 
(113,080
)
 
 
 
 
 
 
 
 
 
 
 
 


Corporate expenses
 
 
(50,834
)
 
 
 
 
 
 
 
 
 
 
 
 


Share-based compensation expense
 
 
(9,782
)
 
 
 
 
 
 
 
 
 
 
 
 


Loss on sale of assets and businesses
 
 
(9,294
)
 
 
 
 
 
 
 
 
 
 
 
 


Amortization of acquired contract liabilities
 
 
5,871
 
 
 
 
 
 
 
 
 
 
 
 
 


Non-service defined benefit income
 
 
5,373
 
 
 
 
 
 
 
 
 
 
 
 
 


Impairment of long-lived assets
 
 
(2,308
)
 
 
 
 
 
 
 
 
 
 
 
 


Debt extinguishment loss
 
 
(11,624
)
 
 
 
 
 
 
 
 
 
 
 
 


Income from continuing operations before income taxes
 
 
(45,851
)
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Total capital expenditures
 
$
19,660
 
 
$
711
 
 
$
14,105
 
 
$
3,233
 
 
$
1,611
 

During fiscal years ended March 31, 2024, 2023, and 2022, the Company had foreign sales of $284,069, $231,162, and $251,695, respectively. The Company reports as foreign sales those sales with delivery points outside of the United States. As of 83
Triumph Group, Inc.Notes to Consolidated Financial Statements(Dollars in thousands, except per share data) March 31, 2024 and 2023, the Company's continuing operations had tangible long-lived assets of approximately $30,358 and $42,495, respectively, principally comprising property, plant, and equipment.
84

 
21. SUMMARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)As disclosed in Note 3, effective in the third quarter of fiscal 2024, we classified our results of operations for all periods presented to reflect Product Support as discontinued operations.  In accordance with Rule 1-02(bb)(ii) of SEC Regulation S-X, the Company has disclosed the following summarized financial information for each quarter of fiscal 2024 and 2023. 





































 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
Fiscal 2024
 
 
Fiscal 2023
 


 
 
June 30
 
 
September 30
 
 
December 31
 
 
March 31
 
 
June 30
 
 
September 30
 
 
December 31
 
 
March 31
 


Net sales
 
$
263,823
 
 
$
284,678
 
 
$
284,955
 
 
$
358,587
 
 
$
295,154
 
 
$
248,288
 
 
$
261,662
 
 
$
325,458
 


Gross Profit
 
 
69,918
 
 
 
74,813
 
 
 
69,983
 
 
 
108,128
 
 
 
61,938
 
 
 
83,509
 
 
 
71,648
 
 
 
103,585
 


(Loss) income from continuing operations
 
 
(21,708
)
 
 
(6,309
)
 
 
(11,911
)
 
 
5,461
 
 
 
(13,462
)
 
 
104,533
 
 
 
5,512
 
 
 
(24,166
)


Net income (loss)
 
 
(18,163
)
 
 
(1,296
)
 
 
(15,902
)
 
 
547,745
 
 
 
(10,342
)
 
 
106,526
 
 
 
10,952
 
 
 
(17,543
)


(Loss) earnings per share—basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(Loss) earnings per share - continuing operations
 
$
(0.33
)
 
$
(0.08
)
 
$
(0.15
)
 
$
0.07
 
 
$
(0.21
)
 
$
1.61
 
 
$
0.09
 
 
$
(0.37
)


Earnings (loss) per share
 
$
(0.27
)
 
$
(0.02
)
 
$
(0.20
)
 
$
7.12
 
 
$
(0.16
)
 
$
1.64
 
 
$
0.17
 
 
$
(0.27
)


Earnings (loss) per share—diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


(Loss) earnings per share - continuing operations
 
$
(0.33
)
 
$
(0.08
)
 
$
(0.15
)
 
$
0.07
 
 
$
(0.21
)
 
$
1.60
 
 
$
-
 
 
$
(0.37
)


Earnings (loss) per share
 
$
(0.27
)
 
$
(0.02
)
 
$
(0.20
)
 
$
7.04
 
 
$
(0.16
)
 
$
1.63
 
 
$
0.08
 
 
$
(0.27
)


 
 
 
TRIUMPH GROUP, INC.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS(in thousands) 





















 
 
Balance atbeginning ofyear
 
 
Additionscharged to(income) expense
 
 
Other (1)
 
 
Balance atend of year
 


For year ended March 31, 2024:
 
 
 
 
 
 
 
 
 
 
 
 


Deferred tax assets valuation allowance
 
$
512,579
 
 
 
(121,056
)
 
 
7,656
 
 
$
399,179
 


For year ended March 31, 2023:
 
 
 
 
 
 
 
 
 
 
 
 


Deferred tax assets valuation allowance
 
$
512,357
 
 
 
(21,279
)
 
 
21,501
 
 
$
512,579
 


For year ended March 31, 2022:
 
 
 
 
 
 
 
 
 
 
 
 


Deferred tax assets valuation allowance
 
$
512,554
 
 
 
18,062
 
 
 
(18,259
)
 
$
512,357
 

 (1)Adjustments relate to changes in defined benefit pension plan and other postretirement benefit plan obligations. 
 
85

 
Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of March 31, 2024, we completed an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2024. 
86

 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Triumph Group, Inc. ("Triumph") is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Triumph's internal control system over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that:
(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in condition, or that the degree of compliance with the policies or procedures may deteriorate.
Triumph's management assessed the effectiveness of Triumph's internal control over financial reporting as of March 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) ("COSO") in Internal Control—Integrated Framework. Based on management's assessment and those criteria, management believes that Triumph maintained effective internal control over financial reporting as of March 31, 2024.
Triumph's independent registered public accounting firm, Ernst & Young LLP, has audited Triumph's effectiveness of internal control over financial reporting. This report appears on the following page.
 






/s/ Daniel J. Crowley
 


Daniel J. CrowleyChairman, President, and Chief Executive Officer 
 


/s/ James F. McCabe, Jr.
 


James F. McCabe, Jr.Senior Vice President andChief Financial Officer 
 


/s/ Kai W. Kasiguran
 


Kai W. KasiguranVice President and Controller
 


 
May 31, 2024 
87

 
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Triumph Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Triumph Group, Inc.’s internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Triumph Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ deficit and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2), and our report dated May 31, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. 
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 






 
/s/ Ernst & Young LLP


 
Philadelphia, Pennsylvania
May 31, 2024
88

 
Changes in Internal Control Over Financial Reporting
In addition to management's evaluation of disclosure controls and procedures as discussed above, we continue to review and enhance our policies and procedures for internal control over financial reporting.
We have developed and implemented a formal set of internal controls and procedures for financial reporting in accordance with the SEC's rules regarding management's report on internal controls. As a result of continued review and testing by management and by our internal and independent auditors, or as a result of newly adopted accounting standards, additional changes may be made to our internal controls and procedures. However, we did not make any changes to our internal control over financial reporting in the fourth quarter of fiscal 2024 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
Item 9B.  Other Information
None.
Item 9C.  Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
89

 
PART III
Item 10.  Directors, Executive Officers and Corporate Governance
The information required for directors and executive officers is incorporated herein by reference to our definitive 2024 Proxy Statement for our 2024 Annual Meeting of Stockholders.
Delinquent Section 16(a) Reports
The information required regarding delinquent Section 16(a) reports is incorporated herein by reference to the 2024 Proxy Statement.
Code of Business Conduct
The information required regarding our Code of Business Conduct is incorporated herein by reference to the 2024 Proxy Statement.
Stockholder Nominations
The information required with respect to any material changes to the procedures by which stockholders may recommend nominees to the Company's board of directors is incorporated herein by reference to the 2024 Proxy Statement.
Audit Committee and Audit Committee Financial Expert
The information required with respect to the Audit Committee and Audit Committee financial experts is incorporated herein by reference to the 2024 Proxy Statement.
Item 11.  Executive Compensation
The information required under this item is incorporated herein by reference to the 2024 Proxy Statement.
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required under this item is incorporated herein by reference to the 2024 Proxy Statement.
Item 13.  Certain Relationships and Related Transactions and Director Independence
The information required under this item is incorporated herein by reference to the 2024 Proxy Statement.
Item 14.  Principal Accountant Fees and Services
The information required under this item is incorporated herein by reference to the 2024 Proxy Statement.
90

 
PART IV
Item 15.  Exhibits, Financial Statement Schedules
(a) Financial Statements
(1) The following consolidated financial statements are included in Item 8 of this report:
 






Triumph Group, Inc.
Page


Consolidated Balance Sheets as of March 31, 2024 and 2023
44


Consolidated Statements of Operations for the Fiscal Years Ended March 31, 2024, 2023, and 2022
45


Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended March 31, 2024, 2023, and 2022 
46


Consolidated Statements of Stockholders' Deficit for the Fiscal Years Ended March 31, 2024, 2023, and 2022 
47


Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2024, 2023, and 2022 
48


Notes to Consolidated Financial Statements
49


Report of Ernst & Young LLP, Independent Registered Public Accounting Firm - PCAOB ID #42
88


 
(2) The following financial statement schedule is included in this report:
 






 
Page


Schedule II—Valuation and Qualifying Accounts
85


 
All other schedules have been omitted as not applicable or because the information is included elsewhere in the consolidated financial statements or notes thereto.
(3) The following is a list of exhibits. Where so indicated, exhibits which were previously filed are incorporated by reference.
 










ExhibitNumber
Exhibit Description
Incorporated by Reference to


 
 
Form
File No.
Exhibit(s)
Filing Date


2.1
Securities and Asset Purchase Agreement, dated as of December 21, 2023, by and among Triumph Group, Inc., Triumph Aftermarket Services Group, LLC, Triumph Group Acquisition Corp., Triumph Group Acquisition Holdings, Inc., The Triumph Group Operations, Inc. and AAR CORP^
8-K
001-12235
2.1
December 22, 2023


3.1
Amended and Restated Certificate of Incorporation of Triumph Group, Inc.
10-K
001-12235
3.1
May 22, 2009


3.2
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Triumph Group, Inc.
8-K
001-12235
3.1
July 20, 2012


3.3
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Triumph Group, Inc. dated July 21, 2023
8-K
001-12235
3.1
July 21, 2023


3.4
Form of Certificate of Designations, Preferences and Rights of Series B Junior Participating Preferred Stock
8-K
001-12235
3.1
March 13, 2019


3.5
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Triumph Group, Inc.
8-K/A
001-12235
3.1
August 5, 2019


3.6
Amended and Restated By-Laws of Triumph Group, Inc.
8-K
001-12235
3.1
April 26, 2019


4.1
Form of Certificate evidencing Common Stock of Triumph Group, Inc.
8-K
001-12235
4.2
March 13, 2019


4.2
Indenture, dated as of March 14, 2023, among Triumph Group, Inc., the subsidiary guarantors signatory thereto and U.S. Bank Trust Company, National Association, as trustee for the Notes.
8-K
001-12235
4.1
March 14, 2023


4.3
Form of 9.000% Senior Secured First Lien Notes due 2028 (included as Exhibit A to the Indenture filed as Exhibit 4.2).
8-K
001-12235
4.1
March 14, 2023


4.4
Tax Benefits Preservation Plan, dated as of March 13, 2019, between Triumph Group, Inc. and Computershare Trust Company, N.A.
8-K
001-12235
4.1
March 13, 2019


4.5
Description of Securities
10-K
001-12235
4.8
May 23, 2019


91

 










ExhibitNumber
Exhibit Description
Incorporated by Reference to


 
 
Form
File No.
Exhibit(s)
Filing Date


4.6
Amended and Restated Receivables Purchase Agreement, dated as of September 29, 2020, among Triumph Receivables, LLC, as seller, Triumph Group, Inc., as servicer, the various purchasers, LC participants and purchaser agents from time to time party thereto, PNC Bank, National Association, as administrator and as LC bank and PNC Capital Markets LLC, as structuring agent.
8-K
001-12235
4.1
October 5, 2020


4.7
Amended and Restated Purchase and Sale Agreement, dated as of September 29, 2020, among various entities listed therein, as the originators, Triumph Group, Inc., individually and as servicer and Triumph Receivables, LLC.
8-K
001-12235
4.2
October 5, 2020


4.8
Amendment No. 14 to Blocked Account Agreement, effective as of November 5, 2021, between Triumph Receivables LLC, Triumph Group, Inc., and PNC Bank, National Association.
10-Q
001-12235
10.1
February 8, 2022


4.9
Twelfth Amended and Restated Purchaser Group Fee Letter, effective as of November 5, 2021, among Triumph Receivables, LLC, Triumph Group, Inc., the various purchasers and purchaser agents from time to time party thereto, PNC Capital Markets LLC, and PNC Bank, National Association.
10-Q
001-12235
10.2
February 8, 2022


4.10
Second Amended and Restated Performance Guaranty, effective as of November 5, 2021, by Triumph Group, Inc., in favor of PNC Bank, National Association.
10-Q
001-12235
10.3
February 8, 2022


4.11
First Amendment to Amended and Restated Purchase and Sale Agreement, effective as of November 5, 2021, among Triumph Group, Inc., Triumph Receivables, LLC, and each of the entities listed on the signature pages hereto as an Originator.
10-Q
001-12235
10.4
February 8, 2022


4.12
Second Amendment to Amended and Restated Receivables Purchase Agreement, effective as of November 5, 2021, among Triumph Group, Inc., Triumph Receivables, LLC, and PNC Bank, National Association.
10-Q
001-12235
10.5
February 8, 2022


4.13
Tax Benefits Preservation Plan, dated March 11, 2022 to be effective as of March 13, 2022, between Triumph Group, Inc. and Computershare Trust Company, N.A.
8-K
001-12235
4.1
March 11, 2022


4.14
Fourth Amendment to Amended and Restated Receivables Purchase Agreement, dated as of December 22, 2023, among Triumph Receivables, LLC, as seller, Triumph Group, Inc., as servicer, the various purchasers, LC participants and purchaser agents from time to time party thereto, and PNC Bank, National Association, as administrator and as LC bank.
8-K
001-12235
4.1
December 29, 2023


4.15
Second Amendment to Amended and Restated Purchase and Sale Agreement, dated as of December 22, 2023, among the various entities listed therein, as the originators, Triumph Group, Inc., individually and as servicer, and Triumph Receivables, LLC.
8-K
001-12235
4.2
December 29, 2023


10.1
Amended and Restated Directors’ Stock Incentive Plan
10-K
001-12235
10.1
May 29, 2012


10.2
Form of Deferred Stock Unit Award Agreement under the Amended and Restated Directors’ Stock Incentive Plan
10-K
001-12235
10.2
May 30, 2013


10.3
Triumph Group, Inc. 2004 Stock Incentive Plan*
10-K
001-12235
10.3
May 30, 2013


10.4
Form of Stock Award Agreement under the 2004 Stock Incentive Plan*
10-K
001-12235
10.7
May 22, 2009


92

 










ExhibitNumber
Exhibit Description
Incorporated by Reference to


 
 
Form
File No.
Exhibit(s)
Filing Date


10.5
Form of letter confirming Stock Award Agreement under the 2004 Stock Incentive Plan*
10-K
001-12235
10.8
May 22, 2009


10.6
Triumph Group, Inc. Supplemental Executive Retirement Plan effective January 1, 2003*
10-K
001-12235
10.17
June 12, 2003


10.7
Compensation for the non-employee members of the Board of Directors of Triumph Group, Inc.
8-K
001-12235
10.1
November 15, 2016


10.8
Triumph Group, Inc. Executive Incentive Plan, effective September 28, 2010 *
10-Q
001-12235
10.1
November 5, 2010


10.9
Form of letter informing Triumph Group, Inc. executives they are eligible to participate in the Company’s Long Term Incentive Plan *
10-K
001-12235
10.22
May 18, 2011


10.10
Form of letter informing Triumph Group, Inc. executives they have earned an award under the Company’s Long Term Incentive Plan and the amount of the award *
10-K
001-12235
10.23
May 18, 2011


10.11
Triumph Group, Inc. 2013 Equity and Cash Incentive Plan, as amended and restated as of June 7, 2017*
8-K
001-12235
99.1
June 12, 2017


10.12
Form of letter regarding eligibility to participate in the Triumph Group, Inc. Restricted Stock Plan*
10-K
001-12235
10.24
May 19, 2014


10.13
The First Amendment of the Triumph Group, Inc. Supplemental Executive Retirement Plan, effective as of May 1, 2015 *
8-K
001-12235
10.1
May 7, 2015


10.14
First Amendment to Triumph Group, Inc. 2013 Employee Stock Purchase Plan *
10-Q
001-12235
10.1
August 4, 2015


10.15
Employment Agreement between Triumph Group, Inc. and Daniel J. Crowley, dated as of April 1, 2016*
8-K
001-12235
10.1
April 7, 2016


10.16
Employment letter between Triumph Group, Inc. and James F. McCabe dated July 26, 2016 *
8-K
001-12235
10.1
July 27, 2016


10.17
Triumph Group, Inc. Directors' Deferred Compensation Plan, effective January 1, 2017
8-K
001-12235
10.2
November 15, 2016


10.18
Form of the 2016 Directors' Equity Compensation Plan, as amended
10-K/A
001-12235
10.33
May 26, 2017


10.19
Form of Restricted Stock Unit Agreement under the 2016 Directors' Equity Compensation Plan, as amended
10-K/A
001-12235
10.34
May 26, 2017


10.20
Triumph Group, Inc. Directors' Deferred Compensation Plan, effective January 1, 2017
8-K
001-12235
10.2
November 15, 2016


10.21
Twentieth Amendment to Receivables Purchase Agreement dated as of November 3, 2017
8-K
001-12235
10.1
November 7, 2017


10.22
Triumph Group, Inc. Amended and Restated 2018 Equity Incentive Plan, effective July 16, 2020*
8-K
001-12235
10.1
July 21, 2020


10.23
Form of Long-Term Incentive Award Letter under the 2018 Equity Incentive Plan*
10-K
001-12235
10.32.2
May 23, 2019


10.24
Triumph Group, Inc. 2018 Executive Cash Incentive Compensation Plan, effective April 1, 2018*
8-K
001-12235
10.2
June 4, 2018


10.25
Form of Short-Term Cash Incentive Award Letter under the 2018 Executive Cash Incentive Compensation Plan*
10-K
001-12235
10.33.1
May 23, 2019


10.26
Triumph Group, Inc. Executive General Severance Plan, effective February 19, 2019*
10-K
001-12235
10.40
May 23, 2019


10.27
Triumph Group, Inc. Executive Change in Control Severance Plan, effective February 19, 2019*
10-K
001-12235
10.41
May 23, 2019


10.28
Twenty-Fifth Amendment to the Receivables Purchase Agreement dated as of December 6, 2019 (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 9, 2019)
8-K
001-12235
10.1
December 9, 2019


10.29
Employment Letter between Triumph Group, Inc. and Jennifer Allen, dated August 14, 2018
10-K
001-12235
10.45
May 28, 2020


10.30
Amendment No. 1 to Triumph Group, Inc. Executive Change In Control Severance Plan.*
10-Q
001-12235
10.2
August 5, 2020


93

 










ExhibitNumber
Exhibit Description
Incorporated by Reference to


 
 
Form
File No.
Exhibit(s)
Filing Date


10.31
Amendment No. 2 to Triumph Group, Inc. Executive Change In Control Severance Plan.*
10-Q
001-12235
10.3
August 5, 2020


10.32
Collateral Trust Agreement, dated August 17, 2020 among the Company, the subsidiary guarantors signatory thereto, Wilmington Trust, National Association, as collateral trustee, and U.S. Bank National Association, as trustee for the Notes.
8-K
001-12235
10.2
August 18, 2020


10.33
Employment Agreement between Triumph Group, Inc. and Daniel J. Crowley, dated as of November 17, 2020.*
8-K
001-12235
10.1
November 18, 2020


10.34
Equity Distribution Agreement, dated February 4, 2021, by and between Triumph Group, Inc. and Citigroup Global Markets Inc.
8-K
001-12235
1.1
February 4, 2021


10.35
Form of Offer Letter between Triumph Group, Inc. and Thomas Quigley dated as of August 26, 2022
10-K
001-12235
10.53
May 24, 2023


10.36
Form of Offer Letter between Triumph Group, Inc. and Kai Kasiguran dated as of August 26, 2022
10-K
001-12235
10.54
May 24, 2023


10.37
Cooperation Agreement, dated as of May 30, 2023, between Triumph Group, Inc. and Vision One Management Partners, LP^
8-K
001-12235
10.1
May 30, 2023


18.1
Preferability Letter from Ernst & Young LLP, Independent Registered Public Accounting Firm, Regarding Change in Accounting Principle.
10-Q
001-12235
18.1
November 5, 2020


21.1
Subsidiaries of Triumph Group, Inc.
#
#
#
#


22.1
List of Subsidiary Guarantors and Issuers of Guaranteed Securities.
#
#
#
#


23.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
#
#
#
#


31.1
Principal Executive Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
#
#
#
#


31.2
Principal Financial Officer Certification Required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
#
#
#
#


32.1
Principal Executive Officer and Principal Financial Officer Certification Required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
##
##
##
##


97.1
Clawback Policy.*
#
#
#
#


101
The following financial information from Triumph Group, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 formatted in iXBRL: (i) Consolidated Balance Sheets as of March 31, 2024 and 2023; (ii) Consolidated Statements of Operations for the fiscal years ended March 31, 2024, 2023, and 2022; (iii) Consolidated Statements of Stockholders’ Deficit for the fiscal years ended March 31, 2024, 2023, and 2022; (iv) Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2024, 2023, and 2022; (v) Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended March 31, 2024, 2023, and 2022; and (vi) Notes to the Consolidated Financial Statements
#
#
#
#


104
Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
#
#
#
#


 
In accordance with Item 601(b)(4)(iii)(A) of Regulations S-K, copies of specific instruments defining the rights of holders of long-term debt of the Company or its subsidiaries are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request
94

 
* Indicates management contract or compensatory plan or arrangement
^ Schedules (and similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the Securities and Exchange Commission upon request.
# Filed herewith
## Furnished herewith
Item 16.  Form 10-K Summary
The Registrant has elected not to include a summary.
95

 
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed by the undersigned, thereunto duly authorized.
 









 
 
 
TRIUMPH GROUP, INC.


 
 
 
 


 
 
 
 
/s/ Daniel J. Crowley


Dated:
 
May 31, 2024
By:
Daniel J. CrowleyChairman, President, Chief Executive Officer and Director(Principal Executive Officer)


 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 









 
 
Chairman, President, Chief Executive Officer and Director
 
May 31, 2024


/s/ Daniel J. Crowley
 
(Principal Executive Officer)
 
 


Daniel J. Crowley
 
 
 
 


 
 
 
 
 


 
 
Senior Vice President and Chief Financial Officer
 
May 31, 2024


/s/ James F. McCabe, Jr.
 
(Principal Financial Officer)
 
 


James F. McCabe, Jr.
 
 
 
 


 
 
 
 
 


 
 
Vice President, Controller
 
May 31, 2024


/s/ Kai W. Kasiguran
 
(Principal Accounting Officer)
 
 


Kai W. Kasiguran
 
 
 
 


 
 
 
 
 


/s/ Neal J. Keating
 
Lead Independent Director
 
May 31, 2024


Neal J. Keating
 
 
 
 


 
 
 
 
 


/s/ Patrick Allen
 
Director
 
May 31, 2024


Patrick Allen
 
 
 
 


 
 
 
 
 


/s/ Paul Bourgon
 
Director
 
May 31, 2024


  Paul Bourgon
 
 
 
 


 
 
 
 
 


/s/ Cynthia M. Egnotovich
 
Director
 
May 31, 2024


Cynthia M. Egnotovich
 
 
 
 


 
 
 
 
 


/s/ Daniel P. Garton
 
Director
 
May 31, 2024


Daniel P. Garton
 
 
 
 


 
 
 
 
 


/s/ Barbara Humpton
 
Director
 
May 31, 2024


Barbara Humpton
 
 
 
 


 
 
 
 
 


/s/ Courtney Mather
 
Director
 
May 31, 2024


Courtney Mather
 
 
 
 


 
 
 
 
 


/s/ Colleen C. Repplier
 
Director
 
May 31, 2024


Colleen C. Repplier
 
 
 
 


 
 
 
 
 


 
 
 
 
 


 
 
 
 
 


 
96

